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Are Knowledge Spillovers International or Intranational in Scope? Microeconometric Evidence from the Japan and the United States

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  • Lee Branstetter
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    Abstract

    In a number of theoretical models, it has been shown that technological externalities can generate multiple equilibria in the global pattern of specialization and trade, with different consequences for the relative welfare of the trading countries. In such models, temporary government policies can have lasting effects by pushing the global economy into a particular equilibrium. However, the prediction of multiple equilibria generally hinges on the assumption that the technological externalities are intranational rather than international in scope. In this paper, I point out important shortcomings in previous attempts to estimate the effects of intranational and international knowledge spillovers. Then, I provide new estimates of the relative impact of intranational and international knowledge spillovers on innovation and productivity at the firm level, using previously unexploited panel data from the U.S. and Japan which provide a rich description of the firms' technological activities and allow for potentially much more accurate measurement of spillover effects. My estimates indicate that knowledge spillovers are primarily intranational in scope, providing empirical confirmation of a crucial assumption in much of the theoretical literature. This finding has important implications for the theoretical literature and the public debate on policy.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5800.

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    Date of creation: Oct 1996
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    Publication status: published as Branstetter, Lee. "Vertical Keiretsu And Knowledge Spillovers In Japanese Manufacturing: An Empirical Assessment," Journal of the Japanese and International Economies, 2000, v14(2,Jun), 73-104.
    Handle: RePEc:nbr:nberwo:5800

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    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.
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    Cited by:
    1. Dion, David-Pascal, 2004. "Regional integration and economic development: An empirical approach," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 21, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Sang-Yong Tom Lee & Xiao Jia Guo, 2004. "Information and Communications Technology (ICT) and Spillover: A Panel Analysis," Econometric Society 2004 Far Eastern Meetings, Econometric Society 722, Econometric Society.
    3. Joze P. Damijan & Matija Rojec & Boris Majcen & Mark Knell, 2008. "Impact of Firm Heterogeneity on Direct and Spillover Effects of FDI: Micro Evidence from Ten Transition Countries," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 21808, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    4. Nahuis, R. & Tang, P.J.G., 1999. "Sectoral Productivity Growth and R&D Spillovers in the Netherlands," Discussion Paper, Tilburg University, Center for Economic Research 1999-15, Tilburg University, Center for Economic Research.
    5. Farhauer, Oliver, 2002. "Folgt aus der Theorie des endogenen Wachstums eine neue Wirtschaftspolitik?," Discussion Papers 2002/3, Technische Universität Berlin, School of Economics and Management.
    6. Mª Luz García de la Vega & José A. Herce, . "Integration and Growth in the EU. The Role of Trade," Working Papers 2000-20, FEDEA.
    7. Pilar Beneito, 2001. "R&D productivity and spillovers at the firms level: evidence from Spanish panel data," Investigaciones Economicas, Fundación SEPI, Fundación SEPI, vol. 25(2), pages 289-313, May.
    8. Bottazzi, Laura, 2001. "Globalization and local proximity in innovation: A dynamic process," European Economic Review, Elsevier, Elsevier, vol. 45(4-6), pages 731-741, May.
    9. Peggy M. Lee, 2005. "A comparison of ownership structures and innovations of US and Japanese firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 39-50.
    10. Funke, Michael & Niebuhr, Annekatrin, 2000. "Spatial R&D spillovers and economic growth : evidence from West Germany," HWWA Discussion Papers 98, Hamburg Institute of International Economics (HWWA).
    11. Alejandro Diaz-Bautista, 2005. "Convergence and Economic Growth considering Human Capital and R&D Spillovers Convergencia y Crecimiento Economico en Mexico considerando al Capital Humano y derrames en Investigacion y Desarrollo," Urban/Regional, EconWPA 0506012, EconWPA.
    12. Charbel Macdissi & Syoum Negassi, 2002. "International R&D Spillovers: An Empirical Study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(2), pages 77-91.

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