The effect of free trade area on technology innovation: An analysis of mechanism and empirical test

Under the trend of economic globalization, the domestic and international markets are very competitive. The establishment of free trade area (FTA) makes member countries much easier to communicate with each other and introduce advanced technologies, so technological innovation ability of the member countries can be promoted through trade, FDI, etc. Such effects are testified in this paper with the R&D input-output function and time series data of the representative countries in NAFTA, ASEAN, such as America, Canada, Mexico, Singapore and China. The empirical results show that after entering into the FTA, each member country's innovation level is enhanced obviously, however, the impacts are different for the member countries of different FTAs.