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Geographic Localization of International Technology Diffusion

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  • Wolfgang Keller

Abstract

Convergence in per capita income across countries turns on whether technological knowledge spillover are global or local. This paper estimates the amount of spillover from R&D expenditures in major industrialized countries on a geographic basis. A new data set is used which encompasses most of the world's innovative activity at the industry-level between the years 1970 and 1995. First, I find that technological knowledge is to a substantial degree local, not global, as the benefits from foreign spillover are declining with distance: on average, a 10% higher distance to a major technology-producing country such as the U.S. is associated with a 0.15% lower level of productivity. Second, technological knowledge has become more global over the sample period. As a determinant of productivity, foreign R&D has significantly gained in importance relative to domestic R&D, and the extent to which knowledge spillover decline with distance has fallen by 20%. The finding of a falling but still high degree of localization has important implications for macroeconomics and growth, trade, and regional economics.

Suggested Citation

  • Wolfgang Keller, 2000. "Geographic Localization of International Technology Diffusion," NBER Working Papers 7509, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7509
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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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