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How special is the special relationship?: using the impact of R&D spillovers on UK firms as a test of technology sourcing

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  • Griffith, Rachel
  • Harrison, Rupert
  • Van Reenen, John

Abstract

How much does US-based R&D benefit other countries and through what mechanisms? We test the "technology sourcing" hypothesis that foreign research labs located on US soil tap into US R&D spillovers and improve home country productivity. Using panels of UK and US firms matched to patent data we show that UK firms who had established a high proportion of US-based inventors by 1990 benefited disproportionately from the growth of the US R&D stock over the next 10 years. We estimate that UK firms’ Total Factor Productivity would 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 was greater. Between countries, the growth of the UK R&D stock did not appear to have a major benefit for US firms who located R&D labs in the UK. The "special relationship" between the UK and the US appears distinctly asymmetric.

Suggested Citation

  • Griffith, Rachel & Harrison, Rupert & Van Reenen, John, 2004. "How special is the special relationship?: using the impact of R&D spillovers on UK firms as a test of technology sourcing," LSE Research Online Documents on Economics 711, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:711
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    More about this item

    Keywords

    International spillovers; technology sourcing; productivity; patents; R&D. JEL classification codes: O32; O33; F23;
    All these keywords.

    JEL classification:

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

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