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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 83:
Technology Spillovers and Innovation - the importance of domestic and foreign sources

Hans Lööf ()

Abstract: This paper asks whether there is evidence of higher innovation output from firms where there is more foreign activity in terms of foreign direct investments (FDI), trade and collaboration on innovation, or if proximity between innovators is more important. With a sample of about two-thirds of Swedish firms with at least 10 employees and by accounting for selectivity and simultaneity biases, sector specific effects and firm specific effects, we find robust evidence for import spill over. There is also support for international knowledge transfer to the local firm from foreign units indicating the importance of both inward and outward FDI. We only find some weak find association between proximity to local partners and innovation. The most important aspect of the local milieu on innovation is skilled labour.

Keywords: Innovation; knowledge spillovers; proximity; trade; FDI; (follow links to similar papers)

JEL-Codes: D21; D21; F23; F23; L21; L22; O31; O32; (follow links to similar papers)

44 pages, February 28, 2007, Revised June 29, 2007

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