International R&D spillovers amongst OECD economies

Abstract

Theories of endogenous growth have recently explored the role of international R&D spillovers. This study extends Coe and Helpman's model (Coe, D. T. and Helpman, E., 1995, International R&D spillovers, European Economic Review, 39, 859–87) allowing for country-specific spillover effects using interactive dummy variables, by netting out the impact of productivity catch-up, and by including a business cycle variable. The empirical results suggest a diverse picture. For some countries, e.g. the USA, Canada and West Germany, recent spillovers seem to have a negative impact on TFP. Hypotheses are suggested to explain the results.