Why buy what you can get for free? The effect of foreign direct investment on state patent rates
Research has shown that foreign direct investment (FDI) encourages economic growth at the state level. We also know that knowledge spillovers, measured via patent counts, contribute to economic growth. Using an instrumental variable approach, this paper demonstrates that FDI increases patent rates in US states, thereby providing a link for the mechanism through which FDI impacts growth. Moreover, we find that FDI in neighboring states has just as strong an impact on patent rates, giving further credence to the notion that knowledge can spill across state borders.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Beata Smarzynska Javorcik, 2004.
"Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages,"
American Economic Review,
American Economic Association, vol. 94(3), pages 605-627, June.
- Smarzynska, Beata K., 2002. "Does foreign direct investment increase the productivity of domestic firms : in search of spillovers through backward linkages," Policy Research Working Paper Series 2923, The World Bank.
- Beata K. Smarzynska, 2003. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," William Davidson Institute Working Papers Series 548, William Davidson Institute at the University of Michigan.
- Gerald Carlino & Satyajit Chatterjee & Robert Hunt, 2006.
"Urban density and the rate of invention,"
06-14, Federal Reserve Bank of Philadelphia.
- Romer, Paul M, 1990.
"Endogenous Technological Change,"
Journal of Political Economy,
University of Chicago Press, vol. 98(5), pages S71-102, October.
- Aghion, P. & Howitt, P., 1989.
"A Model Of Growth Through Creative Destruction,"
527, Massachusetts Institute of Technology (MIT), Department of Economics.
- Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
- Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
- Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
- Shihe Fu, 2005.
"Smart Cafe Cities: Testing Human Capital Externalities in the Boston Metropolitan Area,"
05-24, Center for Economic Studies, U.S. Census Bureau.
- Fu, Shihe, 2007. "Smart Cafe Cities: Testing human capital externalities in the Boston metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 86-111, January.
- Shihe Fu, 2005. "Smart Café Cities: Testing Human Capital Externalities in the Boston Metropolitan Area," Boston College Working Papers in Economics 609, Boston College Department of Economics.
- Kaddour Hadri, 1999.
"Testing For Stationarity In Heterogeneous Panel Data,"
1999_04, University of Liverpool Management School.
- Kaddour Hadri, 2000. "Testing for stationarity in heterogeneous panel data," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 148-161.
- Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998.
"How does foreign direct investment affect economic growth?1,"
Journal of International Economics,
Elsevier, vol. 45(1), pages 115-135, June.
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Angels Pelegrin & Catalina Bolance, 2008.
"Regional Foreign Direct Investment in Manufacturing. Do Agglomeration Economies Matter?,"
Taylor & Francis Journals, vol. 42(4), pages 505-522.
- Àngels Pelegrín & Catalina Bolancé, 2006. "Regional foreign direct investment in manufacturing. Do agglomeration economies matter?," Working Papers 2006/2, Institut d'Economia de Barcelona (IEB).
- Lobo, José & Strumsky, Deborah, 2008. "Metropolitan patenting, inventor agglomeration and social networks: A tale of two effects," Journal of Urban Economics, Elsevier, vol. 63(3), pages 871-884, May.
- 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, vol. 108(3), pages 577-98, August.
- Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
- Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
- Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
- Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-70, December.
- Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
- Coughlin, Cletus C & Terza, Joseph V & Arromdee, Vachira, 1991. "State Characteristics and the Location of Foreign Direct Investment within the United States," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 675-83, November.
- Andersson, Roland & Quigley, John M. & Wilhelmsson, Mats, 2009.
"Urbanization, Productivity and Innovation: Evidence from Investment in Higher Education,"
Berkeley Program on Housing and Urban Policy, Working Paper Series
qt9b4885mq, Berkeley Program on Housing and Urban Policy.
- Andersson, Roland & Quigley, John M. & Wilhelmsson, Mats, 2009. "Urbanization, productivity, and innovation: Evidence from investment in higher education," Journal of Urban Economics, Elsevier, vol. 66(1), pages 2-15, July.
- Norman Sedgley & Bruce Elmslie, 2001. "Agglomeration and Congestionin the Economics of Ideas and Technological Change," American Journal of Economics and Sociology, Wiley Blackwell, vol. 60(1), pages 101-121, 01.
- Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
- Tomas Del Barrio-Castro & Jose Garcia-Quevedo, 2005. "Effects of university research on the geography of innovation," Regional Studies, Taylor & Francis Journals, vol. 39(9), pages 1217-1229.
- Zucker, Lynne G & Darby, Michael R & Armstrong, Jeff, 1998. "Geographically Localized Knowledge: Spillovers or Markets?," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 65-86, January.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Agrawal, Ajay & Kapur, Devesh & McHale, John, 2008. "How do spatial and social proximity influence knowledge flows? Evidence from patent data," Journal of Urban Economics, Elsevier, vol. 64(2), pages 258-269, September.
- Barry T. Hirsch & David A. Macpherson, 2003.
"Union Membership and Coverage Database from the Current Population Survey: Note,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
- Barry T. Hirsch & David A. MacPherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
- Hubert, Florence & Pain, Nigel, 2001.
"Inward Investment and Technical Progress in the United Kingdom Manufacturing Sector,"
Scottish Journal of Political Economy,
Scottish Economic Society, vol. 48(2), pages 134-47, May.
- Nigel Pain, 2000. "Inward investment and technical progress in the United Kingdom manufacturing sector," NIESR Discussion Papers 167, National Institute of Economic and Social Research.
- Acs, Zoltan J. & Anselin, Luc & Varga, Attila, 2002. "Patents and innovation counts as measures of regional production of new knowledge," Research Policy, Elsevier, vol. 31(7), pages 1069-1085, September.
- Jakob B. Madsen & EPRU & FRU, 2007.
"Semi-Endogenous Versus Schumpeterian Growth Models: Testing The Knowledge Production Function Using International Data,"
Monash Economics Working Papers
26-07, Monash University, Department of Economics.
- Jakob Madsen, 2008. "Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data," Journal of Economic Growth, Springer, vol. 13(1), pages 1-26, March.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Callois, Jean-Marc, 2008. "The two sides of proximity in industrial clusters: The trade-off between process and product innovation," Journal of Urban Economics, Elsevier, vol. 63(1), pages 146-162, January.
- Michael E. Porter & Scott Stern, 2000. "Measuring the "Ideas" Production Function: Evidence from International Patent Output," NBER Working Papers 7891, National Bureau of Economic Research, Inc.
- T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
- Timothy C. Ford & Jonathan C. Rork & Bruce T. Elmslie, 2008. "Foreign Direct Investment, Economic Growth, and the Human Capital Threshold: Evidence from US States," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 96-113, 02.
- Wilbur Chung & Juan Alcácer, 2002. "Knowledge Seeking and Location Choice of Foreign Direct Investment in the United States," Management Science, INFORMS, vol. 48(12), pages 1534-1554, December.
- Driffield, Nigel, 2001. "The Impact of Domestic Productivity of Inward Investment in the UK," Manchester School, University of Manchester, vol. 69(1), pages 103-19, January.
- Attila Varga, 2000. "Local Academic Knowledge Transfers and the Concentration of Economic Activity," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 289-309.
- Narula, Rajneesh & Marin, Anabel, 2005. "Foreign direct investment spillovers, absorptive capacities and human capital development : evidence from Argentina," ILO Working Papers 378212, International Labour Organization.
- Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
- Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
- Figlio, David N. & Blonigen, Bruce A., 2000. "The Effects of Foreign Direct Investment on Local Communities," Journal of Urban Economics, Elsevier, vol. 48(2), pages 338-363, September.
- Norman H. Sedgley, 2006. "A Time Series Test of Innovation-Driven Endogenous Growth," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 318-332, April.
When requesting a correction, please mention this item's handle: RePEc:eee:juecon:v:68:y:2010:i:1:p:72-81. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.