We explore the determinants of research specialization across countries and its consequences for relative wages. Using … research regardless of trade barriers or research productivity. As long as trade barriers are not too high, faster diffusion … shifts research activity toward the country that does it better. This shift in research activity raises the relative wage …

of two terms: the effective number of researchers and their research productivity. We present a wide range of evidence … from various industries, products, and firms showing that research effort is rising substantially while research … increases in research effort that offset its declining productivity …