Technological Leaders, Laggards and Spillovers: A Network GVAR Analysis

We study the effects of unanticipated technological shocks across the most innovative economies in the world. We examine who leads and follows in the global technological race and how technological shocks in one country shape innovation activity in another. We put forward a useful approach in modeling the dynamic interdependencies of knowledge spillovers across countries, which exploits the modeling capabilities of the so-called network Global Vector Auto-Regressive (GVAR) framework. Our empirical evidence, on a selected panel of most innovative world economies over the period 1986–2013, show that the USA and China are the dominant countries in the system.