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How Special is the Special Relationship? Using the Impact of US R&D Spillovers on UK Firms as a Test of Technology Sourcing

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  • Rachel Griffith
  • Rupert Harrison
  • John Van Reenen

Abstract

How much does US-based R&D benefit other countries and through what mechanisms? We test the "technologysourcing" hypothesis that foreign research labs located on US soil tap into US R&D spillovers and improvehome country productivity. Using panels of UK and US firms matched to patent data we show that UK firmswho had established a high proportion of US-based inventors by 1990 benefited disproportionately from thegrowth of the US R&D stock over the next 10 years. We estimate that UK firms' Total Factor Productivitywould have been at least 5% lower in 2000 (about $14bn) in the absence of the US R&D growth in the 1990s.We also find that technology sourcing is more important for countries and industries who have "most to learn".Within the UK, the benefits of technology sourcing were larger in industries whose TFP gap with the US wasgreater. Between countries, the growth of the UK R&D stock did not appear to have a major benefit for USfirms who located R&D labs in the UK. The "special relationship" between the UK and the US appearsdistinctly asymmetric.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0659.

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Date of creation: Nov 2004
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Handle: RePEc:cep:cepdps:dp0659

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: international spillovers; technology sourcing; productivity; patents; R&D;

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  1. Jaffe, A.B. & Trajtenberg, M., 1998. "International Knowledge Flows: Evidence from Patent Citation," Papers, Tel Aviv 11-98, Tel Aviv.
  2. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  3. Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 577-98, August.
  4. Branstetter, Lee G., 2001. "Are knowledge spillovers international or intranational in scope?: Microeconometric evidence from the U.S. and Japan," Journal of International Economics, Elsevier, Elsevier, vol. 53(1), pages 53-79, February.
  5. Wolfgang Keller, 2001. "International Technology Diffusion," NBER Working Papers 8573, National Bureau of Economic Research, Inc.
  6. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(478), pages C97-C116, March.
  7. Wolfgang Keller, 1996. "Are International R&D Spillovers Trade-related? Analyzing Spillovers among Randomly Matched Trade Partners," International Trade, EconWPA 9608002, EconWPA.
  8. Manski, C.F., 1991. "Identification of Endogenous Social Effects: the Reflection Problem," Working papers, Wisconsin Madison - Social Systems 9127, Wisconsin Madison - Social Systems.
  9. repec:fth:harver:1473 is not listed on IDEAS
  10. Bruno Van Pottelsberghe De La Potterie & Frank Lichtenberg, 2001. "Does Foreign Direct Investment Transfer Technology Across Borders?," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 490-497, August.
  11. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(3), pages 321-340.
  12. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  13. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 70(2), pages 317-341, 04.
  14. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
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