Scandinavian Working Papers in Economics
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School of Business, Örebro University Working Papers, School of Business, Örebro University

No 2004:9:
Domestic vs International Spillovers: Evidence from Swedish Firm Level Data

Andreas Poldahl

Abstract: This paper investigates the association between total factor productivity growth and the R&D expenditures of Swedish manufacturing firms in the presence of domestic- and international R&D spillovers. The paper assumes that the principal channel of transmission of new technology is through I/O relations. Econometric evidence suggests that international as well as domestic inter-industry R&D spillovers are important determinants of firms’ productivity growth in the long run.

The R&D spillovers generated within the industry and following I/O links seem to be of minor importance in explaining productivity growth. It seems likely that within-industry productivity spillovers follow other channels than I/O flows, such as horizontal spillovers through copying of new products and processes, or labour turnover. The use of a convergence parameter is one way to check for such within-industry technology flows.

Our results indicate that a catch-up process exists by which the non-frontier firms in the Swedish manufacturing sector absorb knowledge spillovers from the leading firms in the industry. Finally, a firm’s own R&D efforts are found to be more or less positively correlated with the TFP growth, maybe the contribution from R&D efforts in some sense are underestimated. *

Keywords: TFP growth; R&D expenditures; Convergence; and R&D spillovers; (follow links to similar papers)

JEL-Codes: O31; O33; (follow links to similar papers)

27 pages, October 14, 2004

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