Publication

This paper investigates Samuelson's argument that technical progress of the trade partner may hurt the home country. The authors illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. They show econometrically that the outflow of domestic knowledge via exports or foreign direct investment may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China.