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The Transmission of Sectoral Shocks Across the Innovation Network

Author

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  • Fons-Rosen, Christian

    (University of California, Merced)

  • Pu, Zhaoxin

    (MPI-IC Munich)

Abstract

Recent innovation literature has documented the benefits of cross-pollination of ideas across a wide set of industries and technology fields in an economy. Industrial and trade policies, by contrast, tend to favor economic specialization through the promotion of selected sectors. In this paper we use a firm-level panel of 13 European countries to assess whether an industry-specific policy propagates across the network of innovating firms through technological linkages. Following the competition shock to the European textile sector, triggered by the 2001 removal of import quotas on Chinese textiles, we find that patenting and knowledge sourcing behavior of non-textile firms are negatively affected. At the aggregate regional level, this indirect effect on non-textile firms can be around three to five times larger than the direct effect.

Suggested Citation

  • Fons-Rosen, Christian & Pu, Zhaoxin, 2020. "The Transmission of Sectoral Shocks Across the Innovation Network," Rationality and Competition Discussion Paper Series 229, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:229
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    Keywords

    technological linkages; spillovers; patents; knowledge sourcing; industrial policy;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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