This study attempts to analyze technical change and the role of R&D spillovers in this process using a quality innovation model. Domestic R&D sector consists of a public and a private R&D sector. Trade is the mechanism through which R&D spillovers are realized, along with increased market size and increased competition. Propositions of the model are tested for the U.S. agricultural sector data. It is found that R&D spillovers affect technological change as well as private R&D spending significantly and positively.