Spillover effects of innovation: Taiwanese evidence

Abstract

This article evaluates spillover effects of innovation of Taiwan's industries by using the input–output (IO) analysis framework. On the basis of IO tables for the years 1981, 1986 1991 and 1996, the structure, magnitude and ranking list of the spillover effect of innovation are revealed. Additionally, several findings are also achieved from the empirical results. First, the spillover effect of process innovation is stronger and about more than twice the spillover effect of product innovation in Taiwan. Furthermore, Taiwan's industries manifest a dispersive technological distribution structure and the spillover effect of the process innovation is more dispersive than that of product innovation. Moreover, Taiwanese industries are rather dependent on foreign technologies, particularly in terms of product innovation.

Notes

¹ Chen and Yang (2005) have made an introduction to Taiwan's innovative activities.

² Taiwan has created a technological industry-based economic growth and plays an important role in the world economy. As the featured story of Business Week in US–Why Taiwan Matters on 16 May 2005, the development process and achievement of Taiwan's technology industries is reported as a specific topic. Taiwan's critical role in the global supply chain is also spotlighted by the statement: ‘…without Taiwan, the operation of the world economy will be out of action’. Furthermore, in the World Competitiveness Report of the IMD Business School and the Global Competitiveness Report of the World Economic Forum (WEF), the position rank of Taiwan's technology is improved from a ranking of eight to a ranking of five in 2006.

³ For instance, in 2004 the R&D/GDP ratios are 2.68% in the US, 3.13% in Japan, 3.51% in Finland, 2.49% in Germany, 4.42% in Israel and 2.94% in Switzerland.

⁴ Those related studies include Chen and Chen (1992), Tsai and Yang (1996), Sakurai et al. (1997), Van Meiji (1997), Verspagen (1997), Vuori (1997) and Wolff (1997).

⁵ The Translog form is used extensively in economics because it is a second-order approximation to any arbitrary function (Yang and Chen, 2008).

⁶ Refer to Dietzenbacher (2000, pp. 29–32) for details of the mathematical calculation processes.

⁷ Refer to Dietzenbacher (2000, pp. 32–33) for details of the mathematical calculation processes.

⁸ There are 99 sectors in the 1981 tables, 123 sectors in the 1986 tables, 150 sectors in the 1991 tables and 160 sectors in the 1996 tables.

⁹ The public administration services and other services are combined into one sector.

¹⁰ The spillover coefficients of each industry k for 1996 in Taiwan are listed in Table A3 in the Appendix.