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International R&D Spillovers, Absorptive Capacity and Relative Backwardness: A Panel Smooth Transition Regression Model

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  • Andrea Fracasso
  • Giuseppe Vittucci Marzetti

Abstract

We investigate how a country's absorptive capacity and relative backwardness affect the impact of international R&D spillovers on domestic Total Factor Productivity (TFP). To account for nonlinearities, we adopt a Panel Smooth Transition Regression approach, where a country's TFP elasticity to the foreign R&D stock is allowed to change smoothly across various identified extreme values, and the change is related to observable transition variables: human capital (capturing the country's absorptive capacity) and relative backwardness. The results suggest that absorptive capacity is positively associated with international R&D spillovers. In contrast with previous results, relative backwardness is instead found to have a negative and significant impact on international knowledge spillovers.

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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 28 (2014)
Issue (Month): 1 (March)
Pages: 137-160

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Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:137-160

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