Working Paper: CEPR ID: DP4698
Authors: Rachel Griffith; Rupert Harrison; John Van Reenen
Abstract: How much does US-based R&D benefit other countries and through what mechanisms? We test the ?technology sourcing? hypothesis that foreign research labs located on US soil tap into US R&D spillovers and improve home country productivity. Using panels of UK and US firms matched to patent data we show that UK firms who had established a high proportion of US-based inventors by 1990 benefited disproportionately from the growth of the US R&D stock over the next 10 years. We estimate that UK firms? Total Factor Productivity would have been at least 5% lower in 2000 (about $14bn) in the absence of the US R&D growth in the 1990s. We also find that technology sourcing is more important for countries and industries who have ?most to learn?. Within the UK, the benefits of technology sourcing were larger in industries whose TFP gap with the US was greater. Between countries, the growth of the UK R&D stock did not appear to have a major benefit for US firms who located R&D labs in the UK. The ?special relationship? between the UK and the US appears distinctly asymmetric.
Keywords: International Spillovers; Patents; Productivity; R&D; Technology Sourcing
JEL Codes: F23; O32; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| US R&D stock growth (O39) | TFP of UK firms (F23) |
| Proportion of US-based inventors in UK firms (O36) | TFP of UK firms (F23) |
| Degree of technology sourcing (O36) | Productivity gains (O49) |
| UK R&D stock growth (O39) | TFP of US firms in UK (F23) |