Local Knowledge Spillovers, Innovation and Economic Performance in Developing Countries: A discussion of alternative specifications

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Local Knowledge Spillovers, Innovation and Economic Performance in Developing Countries: A discussion of alternative specifications

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Kesidou, Effie () (Nottingham University Business School)
Szirmai, Adam () (UNU-MERIT)

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Abstract

This paper examines the importance of local knowledge spillovers for the innovative and economic performance of firms in a developing country context. Theoretical and empirical studies in advanced economies underline the significance of local knowledge spillovers for innovation. However, not much is known about whether local knowledge spillovers work similarly in developing countries. This analysis is based on an original innovation survey in the software industry in Uruguay. The survey focuses on the direct identification and measurement of local knowledge spillovers; pure knowledge spillovers are distinguished from commercial knowledge transactions. Both knowledge spillovers and knowledge transactions are measured at the local and at the international level. The study concludes that local knowledge spillovers play a crucial role in enhancing the innovative performance of software firms in Uruguay. However, for the economic performance of the firms, international knowledge transactions turn out to be more important than local knowledge spillovers. Local Knowledge Spillovers may be essential for innovation, but not sufficient for economic success. Firms in developing countries need to be connected to both the local and the international economy.

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Paper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 033.

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Date of creation: 2008
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Handle: RePEc:dgr:unumer:2008033

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Find related papers by JEL classification:
L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-06-07 (All new papers)
NEP-INO-2008-06-07 (Innovation)
NEP-KNM-2008-06-07 (Knowledge Management & Knowledge Economy)
NEP-URE-2008-06-07 (Urban & Real Estate Economics)

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