Growth Through Inter-sectoral Knowledge Linkages

Jie Cai () and Nan Li

The Review of Economic Studies, 2019, vol. 86, issue 5, 1827-1866

Abstract: The majority of innovations are developed by multi-sector firms. The knowledge needed to invent new products is more easily adapted from some sectors than from others. We study this network of knowledge linkages between sectors and its impact on firm innovation and aggregate growth. We first document a set of sectoral-level and firm-level observations on knowledge applicability and firms’ multi-sector patenting behaviour. We then develop a general equilibrium model of firm innovation in which inter-sectoral knowledge linkages determine the set of sectors a firm chooses to innovate in and how much R&D to invest in each sector. It captures how firms evolve in the technology space, accounts for cross-sector differences in R&D intensity, and describes an aggregate model of technological change. The model matches new observations as demonstrated by simulation. It also yields new insights regarding the mechanism through which sectoral fixed costs of R&D affect growth.

Keywords: Endogenous growth; R&D; Inter-sectoral knowledge spillovers; Firm innovation; Multiple sectors; Resource allocation (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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Working Paper: Growth through Inter-sectoral Knowledge Linkages (2012)
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