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How Special is the Special Relationship? Using the Impact of US R&D Spillovers on UK Firms as a Test of Technology Sourcing

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  • Rachel Griffith
  • Rupert Harrison
  • John Van Reenen

Abstract

How much does US-based R&D benefit other countries and through what mechanisms? We test the "technologysourcing" hypothesis that foreign research labs located on US soil tap into US R&D spillovers and improvehome country productivity. Using panels of UK and US firms matched to patent data we show that UK firmswho had established a high proportion of US-based inventors by 1990 benefited disproportionately from thegrowth of the US R&D stock over the next 10 years. We estimate that UK firms' Total Factor Productivitywould have been at least 5% lower in 2000 (about $14bn) in the absence of the US R&D growth in the 1990s.We also find that technology sourcing is more important for countries and industries who have "most to learn".Within the UK, the benefits of technology sourcing were larger in industries whose TFP gap with the US wasgreater. Between countries, the growth of the UK R&D stock did not appear to have a major benefit for USfirms who located R&D labs in the UK. The "special relationship" between the UK and the US appearsdistinctly asymmetric.

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  • Rachel Griffith & Rupert Harrison & John Van Reenen, 2004. "How Special is the Special Relationship? Using the Impact of US R&D Spillovers on UK Firms as a Test of Technology Sourcing," CEP Discussion Papers dp0659, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0659
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    More about this item

    Keywords

    international spillovers; technology sourcing; productivity; patents; R&D;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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