International spillovers and absorptive capacity: A cross-country cross-sector analysis based on patents and citations

This paper provides an empirical assessment of the effect of national and international knowledge spillovers on innovation at a finely defined sectoral level for six major industrialised countries over the period 1981-1995. International spillovers are always found to be effective in increasing innovative productivity. The paper then uses self-citations to investigate the role of prior R&D experience in enhancing a country?s ability to understand and improve upon external knowledge (absorptive capacity). The empirical results show that absorptive capacity increases the elasticity of a country?s innovation to both national and international spillovers. The larger the gap of a country with the technological leaders, the weaker is this effect, but the larger is the country?s potential to increase it.

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