Abstract
The role of vertical specialisation and backward linkages have received attention in many growth models. Particular emphasis has been placed on the effects they both have on economic growth as transmission mechanisms through which international technology transfer can take place. Nevertheless, empirical evidence concerning the simultaneous influence of both vertical specialisation and backward linkages and the effects they have on the growth of the economy is still lacking. The purpose of the study is to provide empirical evidence regarding the direct impact of these variables as channels of international technology diffusion. In addition, this research aims to capture the different outcomes in economic growth when analysing two different groups of countries in separation, namely emerging and advanced countries. The reason for this is that these countries have different absorptive capacities. OLS estimates do not adequately deal with the issue of unobserved heterogeneity, nor sufficiently account for the time variation in our variables. Furthermore, fixed-effects models may suffer endogeneity and may not be appropriate for the estimation. We will be relying on the coefficients of the system GMM model, which will control for endogeneity of the variables by using instruments with data spanning from 1995-2011 on 18 countries...
M.Com. (Development Economics)