relevant knowledge base is codifiable, codified, simple and independent,...the more likely spatial proximity does not play a relevant role in permitting the transfer of relevant knowledge" (p.15) The rest of this paper offers an exploratory analysis of the regional dimension of technology accumulation and diffusion. Section 2 reviews the existing empirical research on international knowledge flows looking for evidence of a regional dimension. Section 3 provides some evidence of "country aspects" of technological regionalism. Section 4 looks at sectoral aspects. Section 5 concludes and looks at some policy implications.

# **2. The evidence**

While very few studies explicitly address the issue of technological regionalism, several empirical contributions offer some evidence of geographical 2 patterns of innovation diffusion. In reviewing them it is useful to distinguish between aggregate (i.e. country level) and sectoral aspects.

_Country aspects ._ Ben David and Rahman (1996) look at the issue of convergence in real per capita incomes and find that this is stronger for countries that trade with each other more intensely. Income convergence is related to technological diffusion through trade if one assumes that total factor productivity (TFP) is a proxy for technology. They find support for the hypothesis that trade plays a major role in technology diffusion and that the latter is related to a reduction in the degree of disparities among countries. One implication is that if there is trade regionalism, i.e. trade exhibits regional patterns, there is also some technology regionalism. The trade groups reported by Ben David and Rahman do show some regional aggregation with, e.g. European countries grouped among themselves, Japan grouped with Australia, Korea and the US, and the US grouped with the other countries that show the highest R&D shares (Japan, UK, Germany) as well as with Canada and Mexico.

Similar evidence can be obtained from Coe and Helpman's (1993) calculation of cross countries' elasticities of TFP with respect to R&D capital stocks in the G7 countries. Countries with high elasticties indicate a strong effect of technology diffusion. While the highest elasticities are those with respect to the US, there is also indication of a European regional pattern, with Germany playing the role of regional leader, while Japan holds a similar role for Australia and New Zealand. What these data suggest is that the size of the trading partner is relevant (i.e. smaller countries are more dependent on the foreign stock of R&D than large countries).

Coe, Helpman, and Hoffmeister (1994) extend the previous investigation to developing countries. While the R&D spillovers from the US exhibit the highest TFP elasticities, fast growing East Asian countries show the highest elasticities with respect to Japan and large Mediterranean countries such as Egypt and Turkey show the highest elasticities with respect to Germany.

Regional patterns of technology diffusion related to regional patterns in trade are also found by Bayoumi, Coe and Helpman (1996). They carry out simulation exercises with a multicountry model integrated with the diffusion of R&D stocks

> 2 A recent survey is provided by Mohnen (1996)

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