International trade, technology spillover, and skill demand in developing countries

Many developing countries have experienced rising skill demand and wage inequality after trade liberalization, which opposite the predict of Stolper-Samuelson theorem. In this paper, we explain this puzzle from the view of technology spillovers of international trade. We firstly present a technology spillover model with imported intermediate goods from industrial countries. It concluded that, technology spillover of international trade, knowledge producing and learning are also skill-biased, which makes developing countries increase the relative demand for skilled labour. We further empirically test the impact of technology spillover of international trade on skill demand using data in China´s manufacturing. We find that technology spillover of trade is skill-biased, and the factor bias of spillover technology differs greatly across different types of manufacturing sectors. For labour-intensive sectors spillover technology is on average skill-neutral, but for technology-intensive sectors it is skill-biased.