TRADE IN IDEAS - PATENTING AND PRODUCTIVITY IN THE OECD

We develop a model of growth and technology diffusion which we fit to aggregate data from OECD countries. Our model implies that each countr y will eventually grow at the same rate, with its relative productivit y determined by its ability to adopt new inventions. Hence productivit y levels rather than growth rates better reflect a country's ability t o innovate or to adopt new technology. We estimate the model to explai n international patterns of productivity and patenting. We find that m ore than 50% of the growth in each country in our sample derives from innovation in the United States, Germany, and Japan.