Revealing the International Spillovers Structure of Innovation for Asian Region

Abstract

The objective of this study aims to provide an overall revelation of the magnitude, frame, flow, and output creation effect of cross-national and cross-sectoral spillover of innovation within Asia. Methodologically, Dietzenbacher's framework for evaluating the innovative spillover effect is modified and extended to a cross-national and cross-sectoral context for accommodating this purpose, accompanied by the utilization of the Asian International I/O (AIO) table for the year 2000. Several results are thus achieved: (1) For the spillover structure, it is understood that the inter-sectoral dependence and vertical specialization in production serves as the nexus for the skeleton of rent spillover. (2) The extent of process innovative spillover is at a level of approximately 90%, while the extent of product innovative spillover is roughly in the 40–50% range. (3) On average, a 1% process innovation would create the total Asian output by a 0.0025–0.1387% margin, and a 1% product innovation would contribute 0.0010–0.0575% of the total output. (4) The United States, Japan, and China rank as the top three countries equipped with the capability of creating the most plentiful innovative spillover effect on the Asian region overall. (5) The United States and Japan still occupy the position of leading flying geese to date, while China might emerge as an industrial innovative leading flying goose in the near future. (6) Under the prerequisite of regional development, this study has tabulated the sector rankings according to the strength of overall spillover effect by country as a reference for tactically reallocating industrial and innovative policy from a regional development perspective.

Keywords:

• Innovation
• spillover effect
• IO table

JEL CLASSIFICATION:

• L16
• O33
• P51

Acknowledgements

We are indebted to the anonymous referee's valuable comments. Any remaining errors are the responsibility of the authors. We are also grateful for financial support from National Science Council Grant No. NSC98-2410-H-431-009-) enabling this research to be completed.

Notes

1. The channels might be patent citation, technology purchase, trade, imitation, labour flow, symposia and direct investment.

2. For details please refer to the literature review that follows.

3. According to Griliches (1979, 1992), the rent spillover reflects a transfer of productivity gains from trade with other innovative sectors, where the benefit was not fully reflected in its price. For example, the quality of automobiles produced by downstream fabricating firms could be improved by adopting new better-performing engines innovated by upstream firms. Further, the knowledge spillover reflects an additional increase of know-how stock resulted from other sectors’ public good nature of knowledge. For example, an invention of financial commodities could not be patented and prevent being imitated by others. In literature, Guellec and Van Pottelsberghe de la Potterie (2004) has ever argued and empirically shown that the two spillovers indeed overlap to a certain extent. The rent spillover inclines to be a more narrow sense definition that captures benefit of knowledge embodied on innovation, while entails more explicit relational nature than the knowledge spillover.

4. For the detailed derivative calculation process please refer to Dietzenbacher (2000).

5. For the detailed derivative calculation process please refer to Dietzenbacher (2000).

6. It includes at least market supply and demand, R&D cost, manufacturing cost, firm's operational efficiency, and the magnitude of patent protection.

7. For example, if there are 10 countries included in a study and each has 20 industrial sectors, then there would be at least 36,000 spillover processes that need to be considered.

8. For details of the compilation of AIO tables please refer to IDE-JETRO (2006).

9. Only the top four industries are listed in view of the paper length. The detailed ranking, figure, and entire industry list are available on request.

10. The L is for the sector whose spillover innovation is lower than the country average.