Technology spillover effects and economic integration: evidence from integrating EU countries

Kurt Hafner

Applied Economics, 2014, vol. 46, issue 25, 3021-3036

Abstract: The article uses time series for the period 1981-2008 to estimate the impact of foreign technology spillover effects on Greece, Ireland, Portugal and Spain, representing the integrating European Union (EU) countries. I restrict technology diffusion to EU-12 countries and compare the results to unrestricted technology diffusion from a sample of 32 OECD countries. Accounting for nonstationarity and co-integration, the dynamic OLS estimator is used to estimate the impact of foreign R&D stock on labour productivity, taking into account patent-, trade- and FDI-related technology diffusion channels. I find empirical evidence for trade-related foreign technology spillover effects for Greece and Ireland if technology diffusion is unrestricted. Restricting technology diffusion to EU-12 countries, there are significant foreign technology spillover effects from European integration for Portugal (patent related) and Spain (trade and FDI related). Moreover, the domestic R&D stock and education are significant drivers for labour productivity in integrating EU countries. The empirical results are robust for different regression specifications and sources of technology diffusion.

Date: 2014
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Working Paper: Economic Development and Technology Diffusion (2007)
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DOI: 10.1080/00036846.2014.920479

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