ABSTRACT
Exploitation and application of knowledge is a central feature of economic growth; knowledge that is diffused through the variety of channels by which human capital spills over within and across economies. Trade and investment are the best-known channels but behind these aggregates are the choices and challenges faced by businesses and governments. International trade involves technical choices as well as the training and transfer of people. Knowledge embodied in stocks of research and development (R&D) in the more advanced countries diffuses across borders through trade, foreign direct investment (FDI) as well as by alliances between unrelated firms. Modern information technology permits coordination of production and R&D activities with affiliates and unrelated partners. Production and assembly of components, marketing, procurement and, increasingly, R&D capabilities are locating in a growing number of Asian centres.
