Working Paper: CEPR ID: DP6435
Authors: Rachel Griffith; Sokbae Lee; John van Reenen
Abstract: We examine the 'home bias' of international knowledge spillovers as measured by the speed of patent citations (i.e. knowledge spreads slowly over international boundaries). We present the first compelling econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models and we apply it to data on over two million citations between 1975 and 1999. Home bias declines substantially when we control for fixed effects: there is practically no home bias for the more 'modern' sectors such as pharmaceuticals and information/communication technologies.
Keywords: Fixed Effects; Home Bias; Knowledge Spillovers; Patent Citations
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 |
|---|---|
| home bias in international knowledge spillovers has declined over time (F29) | speed of patent citations from foreign inventors to domestic inventors has increased (O39) |
| speed of patent citations from foreign inventors to domestic inventors has increased (O39) | home bias has diminished (F69) |
| communication and travel costs have decreased (L96) | speed of patent citations from foreign inventors to domestic inventors has increased (O39) |
| speed of patent citations from foreign inventors to domestic inventors has increased (O39) | geographical localization of knowledge spillovers has diminished (F69) |
| unobserved patent quality (L15) | observed degree of home bias is reduced (G15) |