International R&D Spillovers, Absorptive Capacity and Relative Backwardness: A Panel Smooth Transition Regression Model

Andrea Fracasso and Giuseppe Vittucci Marzetti

International Economic Journal, 2014, vol. 28, issue 1, 137-160

Abstract: We investigate how a country's absorptive capacity and relative backwardness affect the impact of international R&D spillovers on domestic Total Factor Productivity (TFP). To account for nonlinearities, we adopt a Panel Smooth Transition Regression approach, where a country's TFP elasticity to the foreign R&D stock is allowed to change smoothly across various identified extreme values, and the change is related to observable transition variables: human capital (capturing the country's absorptive capacity) and relative backwardness. The results suggest that absorptive capacity is positively associated with international R&D spillovers. In contrast with previous results, relative backwardness is instead found to have a negative and significant impact on international knowledge spillovers.

Date: 2014
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Working Paper: International R&D spillovers, absorptive capacity and relative backwardness: a panel smooth transition regression model (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:intecj:v:28:y:2014:i:1:p:137-160

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DOI: 10.1080/10168737.2013.787109

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