Assessing the relative importance of multiple channels for embodied and disembodied technological spillovers

Krammer, Sorin (2013): Assessing the relative importance of multiple channels for embodied and disembodied technological spillovers. Published in: Technological Forecasting and Social Change , Vol. 81, No. 1 (January 2014): pp. 272-286.

Abstract

With ever increasing global integration, productivity improvements depend not only on in-house innovative efforts, but on those of international partners as well. This paper explores the impact of foreign R\&D on productivity and technical efficiency of countries by considering three major channels of embodied and disembodied spillovers, namely trade, foreign direct investment and patenting, and controlling for direct licensing of foreign technologies. Furthermore, it contrasts these effects across 47 developed and transition countries between 1990 and 2009. Overall, I find that trade remains the dominant factor behind productivity and technical progress, while the effects of FDI- and patent-related spillovers are significantly smaller. The effect of foreign patenting is larger in developed nations while imports, inward FDI and foreign technology licensing are important sources of know-how for transition economies. The aggregate gains from spillovers appear larger for latter, confirming their significance in the process of development and catching-up.

• Item Type: MPRA Paper
• Language: English
• Keywords: R&D spillovers; trade; FDI; patents; licensing
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

References

Acharya R.C., and W. Keller. 2007. Estimating the Productivity Selection and Technology Spillover Effects of Imports. National Bureau of Economic Research, Inc. RePEc. Available: http://ideas.repec.org/p/nbr/nberwo/14079.html.

Aitken B., and Harrison A., 1999. Do Domestic Firms Benefit from Foreign Direct Investment? Evidence from Venezuala. American Economic Review. 89(3): 605-618.

Ang, J.B., 2011. Financial development, liberalization and technological deepening. European Economic Review 55:688-701.

Ang, J.B., Madsen, J., 2012. International R\&D Spillovers and Productivity Trends in the Asian Miracle Economies” (Forthcoming in Economic Inquiry).

Anwar, S. and Nguyen, L.P., 2010. Foreign direct investment and export spillovers: Evidence from Vietnam. International Business Review. In Press, Corrected Proof.

Arora A., Fosfuri A., and Gambardella A., 2001. Markets for technology: the economics of innovation and corporate strategy. The MIT Press, Cambridge, MA.

Athreye S. and J. Cantwell, 2007. Creating competition?: Globalisation and the emergence of new technology producers. Research Policy 36, no. 2: 209-226.

Audretsch D. B., and Feldman M. P., 1996. R\&D Spillovers and the Geography of Innovation and Production. American Economic Review 86: 630-640.

Barro, R and J.-W. Lee, 2010. A New Data Set of Educational Attainment in the World, 1950-2010. NBER Working Paper No. 15902,

Bascavusoglu E., and M.P. Zuniga, 2002. Foreign patent rights, technology and disembodied knowledge transfer cross borders: An empirical investigation. Unpublished manuscript. University of Paris I, France.

Battese, G. E., Coelli, T. J., 1995. A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics, 20, 325-332.

Borensztein, E., J. De Gregorio, and J-W. Lee. 1998. How Does Foreign Direct Investment Affect Economic Growth? Journal of International Economics 45 (1): 115-135.

Branstetter L.G., 2001. Are knowledge spillovers international or intranational in scope? Microeconometric evidence from the U.S. and Japan. Journal of International Economics 53, pp. 53–79.

Branstetter L.G., 2006. Is foreign direct investment a channel of knowledge spillovers? Evidence from Japan's FDI in the United States. Journal of International Economics vol. 68(2), pp. 325--344.

Breitung J., 2000. The local power of some unit root tests for panel data. In: B. Baltagi (ed), Advances in Econometrics. Vol. 15: Nonstationarity panels, panel cointegration and dynamic panels. Amsterdam, JAI Press, pp.161-178.

Broadman H.G., 2006. From Disintegration to reintegration. Eastern Europe and the Former Soviet Union in International Trade. The World Bank, Washington DC.

Buckley P.J., Wang C., and J. Clegg, 2007. The impact of foreign ownership, local ownership and industry characteristics on spillover benefits from foreign direct investment in China. International Business Review 16 (2): 142-158.

Busse M. and J.L. Groizard, 2008. Foreign direct investment, regulations and growth. The World Economy 31(7): 861-886

Busse M. and J.L. Groizard, 2008. Technology Trade in Economic Development. The World Economy 31(4): 569-592

Cassiman B. and R. Veugelers, 2006. In Search of Complementarity in Innovation Strategy: Internal R\&D and External Knowledge Acquisition. Management Science 52, no. 1: 68-82.

Cassiman, B., and R. Veugelers. 2007. Are External Technology Sourcing Strategies Substitutes or Complements? The Case of Embodied Versus Disembodied Technology Acquisition. IESE Business School. Available at: http://ideas.repec.org/p/ebg/iesewp/d-0672.html.

Chandra V. and Kolavalli S., 2006. Technology, adaptation and exports: how some developing countries got it right. In: Technology, adaptation and exports: how some developing countries got it right (Chandra V., Ed.), pp.1-41, Washington DC, World Bank.

Chen J. R. and Yang C. H., 2006. The effects of knowledge capital on enhancing firms’ productivity in Taiwan: Does R\&D or technology import matter? Hitotsubashi Journal of Economics, 47(2), pp.137-153.

Cincera M. and Van Pottelsberghe de la Potterie B., 2001. International R\&D Spillovers: a Survey. Brussels Economic Review/Cahiers Economiques de Bruxelles, Editions du DULBEA, Université libre de Bruxelles, Department of Applied Economics, vol. 0(169), pp. 3-31.

Ciruelos A. and Wang M., 2005. International Technology Diffusion: Effects of Trade and FDI. Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4).

Coe, D.T., Helpman, E. and Hoffmaister, A. W., 2009. International R\&D spillovers and institutions, European Economic Review, Elsevier 53(7): 723-741.

Coe D., and E. Helpman, 1995. International R\&D spillovers. European Economic Review, Elsevier, vol. 39(5).

Coe, D., Helpman E. and A. Hoffmaister, 1997. North-South R\&D Spillovers. Economic Journal, Royal Economic Society, vol. 107(440).

Correa C. M., 2005. Can the TRIPS agreement foster technology transfer to developing countries? In K. E. Maskus, and J. H. Reichman (Eds.), International public goods and transfer of technology under a globalized intellectual property regime. Cambridge: Cambridge University Press.

Djankov S. and Hoekman B., 2000. Foreign investment and productivity growth in Czech enterprises. World Bank Econ. Rev. 14, pp. 49–64.

Eaton J. and Kortum S., 1999. International Technology Diffusion: Theory and Measurement. International Economic Review vol. 40(3): 537-70.

Furman J. and R. Hayes, 2004. Catching Up or Standing Still? National Innovative Productivity among ‘Follower’ Nations, Research Policy 33: 1329-1354.

Gans J. and S. Stern, 2000. Incumbency and R\&D Incentives: Licensing the Gale of Creative Destruction . Journal of Economics and Management Strategy vol. 9: 485-511.

Ghauri P.N., and M. Yamin, 2009. Revisiting the impact of multinational enterprises on economic development. Journal of World Business 44 (2): 105-107.

Gorg, H. and D. Greenaway, 2004. Much ado about nothing? Do domestic firms really benefit from foreign direct investment? World Bank Research Observer 19(2): 171–-197.

Griffith R., Redding S. and H. Simpson, 2004. Foreign Ownership and Productivity: New Evidence from the Service Sector and the R\&D Lab. CEP Discussion Papers dp0649, Centre for Economic Performance, LSE.

Griliches Z., 1979. Issues in Assessing the Contribution of Research and Development to Productivity Growth. Bell Journal of Economics, The RAND Corporation, vol. 10(1), pp. 92-116.

Grossman G. and E. Helpman, 1991. Innovation and growth in the global economy. MIT Press, Cambridge MA.

Gu Q. and J.W. Lu, 2010. Effects of inward investment on outward investment: The venture capital industry worldwide 1985–-2007. Journal of International Business Studies 42: 263--284.

Hadri K., 2000. Testing for nonstationarity in heterogeneous panel data. Econometrics Journal 3 (2): 148-161.

Hall R. and C. Jones, 1999. Why Do Some Countries Produce So Much More Output per Worker than Others? NBER Working Papers 6564.

Hall, B.H., 2011. The internationalization of R\&D. UNU-MERIT Working Paper Series. Available at: http://econpapers.repec.org/paper/dgrunumer/2011049.htm (Accessed November 1, 2011).

Harhoff D., 1996. Strategic Spillovers and Incentives for Research and Development. Management Science 42, no. 6: 907-925.

Hausmann R., Hwang J. and D. Rodrik., 2007. What you export matters. Journal of Economic Growth 12 (1): 1-25.

Im K., Pesaran M. and Y. Shin, 2003. Testing for unit root in heterogeneous panels. Journal of Econometrics 115 (1): 53-74.

Jaffe A.B., Trajtenberg M. and R. Henderson, 1993. Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations. The Quarterly Journal of Economics, MIT Press, vol. 108(3), pp. 577-598.

Javorcik, B.S., 2004. Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review 94(3): 605-–627.

Kao C. and M. Chiang, 2000. On the estimation and inference of a cointegrated regression in panel data. Advances in Econometrics 15, pp.179-222.

Keller W., 2004. International Technology Diffusion. Journal of Economic Literature, American Economic Association, vol. 42(3).

Kim J.W. and H.K. Lee, 2004. Embodied and disembodied international spillovers of R\&D in OECD manufacturing industries. Technovation 24: 359-368.

Kinoshita, Y., 2001. R\&D and Technology Spillovers through FDI: Innovation and Absorptive Capacity, C.E.P.R. Discussion Papers. Available at: http://ideas.repec.org/p/cpr/ceprdp/2775.html (Accessed November 1, 2011).

Krammer M.S.S., 2009. Drivers of national innovation in transition: Evidence from a panel of Eastern European countries. Research Policy 38 (5): 845-860.

Krammer M.S.S., 2010. International R\&D spillovers in emerging markets: the impact of trade and foreign direct investment. The Journal of International Trade and Economic Development 19: 591-623.

Le, T., 2010. Are student flows a significant channel of R\&D spillovers from the north to the south?. Economic Letters, 107 (3): 315-317.

Lee G., 2005. The effectiveness of international knowledge spillover channels. European Economic Review 50: 2075-2088.

Levin A., Lin C. and C. Chu, 2002. Unit root tests in panel data: asymptotic and finite sample properties. Journal of Econometrics 108: 1-24.

Lichtenberg F. and B. van Pottelsberghe de la Potterie, 1998. International R\&D spillovers: a comment. European Economic Review 42(8): 1483-91.

Los B. and B. Verspagen, 2007. Technology Spillovers and Their Impact on Productivity. In: H. Hanusch and A. Pyka (eds.), Elgar Companion to Neo-Schumpeterian Economics, Cheltenham UK: Edward Elgar, pp. 574-593.

Madsen, J.B., 2009. Trade barriers, openness and economic growth. Southern Economic Journal 76: 753-767.

Mendi P., 2005. The Structure of Payments in Technology Transfer Contracts: Evidence from Spain. Journal of Economics and Management Strategy, Blackwell Publishing, vol. 14(2), pp. 403-429.

Mendi P., 2007. Trade in disembodied technology and total factor productivity in OECD countries. Research PolicyVolume 36 (1), pp. 121-133.

Meyer K.E. and E. Sinani, 2009. When and where does foreign direct investment generate positive spillovers? A meta-analysis. Journal of International Business Studies 40, no. 4: 1075-1094.

Moretti E., 2002. Human Capital Spillovers in Manufacturing: Evidence from Plant-Level Production Functions. National Bureau of Economic Research Working Paper Series No. 9316.

Mowery D.C. and J. E. Oxley, 1995. Inward technology transfer and competitiveness: the role of national innovation systems. Cambridge Journal of Economics 19, no. 1: 67 -93.

Nelson R. and E. Phelps, 1996. Investment in humans, technological diffusion and economic growth. The American Economic Review, Papers and proceedings, 61, pp. 69-75.

Park W.G., 1995. International R\&D spillovers and OECD economic growth. Economic Inquiry 33: 571–-591.

Park, J. 2004. International Student Flows and R\&D Spillovers. Economics Letters 82 (3): 315–-320.

Pedroni P., 1999. Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics 61, 653-670.

Pedroni P., 2004. Panel cointegration; Asymptotic and finite sample properties of pooled time series tests with an application to the purchasing power parity hypothesis. Econometric Theory 20 (3), pp. 597-625.

Pisano G.P., 1990. The R\&D Boundaries of the Firm: An Empirical Analysis. Administrative Science Quarterly 35 (1): 153-176.

Riviera-Batiz L. and P. Romer, 1991. Economic integration and endogenous growth. Quarterly Journal of Economics 107: 531-556.

Saggi K., 2004. International technology transfer to developing countries. London: Commonwealth Secretariat.

Singh J., M. Marx and L. Fleming, 2010. Patent Citations and the Geography of Knowledge Spillovers: Disentangling the Role of State Borders, Metropolitan Boundaries and Distance. INSEAD working paper 2010/03/ST. (Accessed November 10, 2011)

Shih, H.-Y. and S.T. Chang, 2009. International diffusion of embodied and disembodied technology: A network analysis approach. Technological Forecasting and Social Change 76, no. 6: 821-834.

Tang, L. and Koveos, P.E., 2008. Embodied and disembodied R\&D spillovers to developed and developing countries. International Business Review, 17(5): 546-558.

Teece D.J., 1986. Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy 15, no.6: 285-305.

Thompson P., 2006. Patent Citations and the Geography of Knowledge Spillovers: Evidence from Inventor- and Examiner-added Citations. The Review of Economics and Statistics, MIT Press, vol. 88(2), pp. 383-388.

Vernon, R., 1966. International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics, 80(2): 190-207.

Wang M., Wong M.C., 2012. International R\&D transfer and technical efficiency: Evidence from a panel study using stochastic frontier analysis. World Development 40: 1982-1998.

Wei, Y., and Liu, X. 2006. Productivity spillovers from R\&D, exports and FDI in China's manufacturing sector. Journal of International Business Studies, 37(4): 544–557.

Xu B. and E. Chiang, 2005. Trade, patents and international technology diffusion. Journal of International Trade and Economic Development, Vol. 14, No.1, pp.115-135.

Xu B. and J. Wang, 1999. Capital goods, trade and R\&D spillovers in the OECD, Canadian Journal of Economics, 32, pp.1258-74.

Zhu L. and B.N. Jeon, 2007. International R\&D Spillovers: Trade, FDI, and Information Technology as Spillover Channels, Review of International Economics, 15(5): 955–-976.

Zuniga M.P. and D. Guellec, 2009. Who Licenses out Patents and Why?: Lessons from a Business Survey.OECD Science, Technology and Industry Working Papers 2009/5, OECD, Directorate for Science, Technology and Industry.