New technologies generate positive externalities -- non-innovators can benefit through the adoption or imitation of the new technologies. International trade serves as a major channel for technology diffusion, allowing importing countries to acquire technical knowledge that they can potentially internalize. To empirically test the effects of trade on technology diffusion, the previous literature typically considers the effects of direct (bilateral) trade on indirect measures of technologies (e.g., TFP). We conjecture that the impact of trade on technology diffusion would be more accurately measured by taking into account both the direct and indirect network effects and by using direct measures of technologies (e.g., intensity levels). The international trade system can be considered as a weighted network. Technology may be diffused, not only bilaterally between countries, but also through the network effects, i.e., indirectly by trading with intermediate countries. We find that the network effects of trade play a significant role in technology diffusion. In most cases, countries better-connected on the trade network have higher technology intensities. Further support for the importance of trade is provided by our finding that for “outdated” technologies, better-connected countries have lower technology intensities.