External Knowledge, R&D, and Innovation: Mapping the Market for Technology Across European Industries

Christoph Grimpe, Fuad Hasanov, Wolfgang Sofka, Geoffrey Borchardt and Philip Schulz

No 2025/020, IMF Working Papers from International Monetary Fund

Abstract: A well-functioning market for technology, or ideas, is an important determinant for the type, scope, and distribution of innovation activities. We use a panel of 20 industries across 24 European countries to study the key determinants driving the market for technology. We explore whether the expenditures on external knowledge depends on the sectoral pattern of innovation and an industry’s distance to the global technological frontier. Disseminating knowledge and technology within the industry, bringing it closer to the global technological frontier, tends to reduce the expenditures for external knowledge except in supplier-dominated industries. We also find important complementarity effects in the market for external knowledge. Industries with high R&D spending, with increasingly large firms, and with large investments in machinery and software foster growth of the market for technology. Our findings suggest tailoring innovation policies to help expand both the size of the market for technology and the use of these markets in specific industries.

Keywords: Markets for technology; patterns of innovation; industry studies; R&D; external knowledge; industrial policy; innovation policy; market size; IMF working paper 25/20; innovation activity; software foster growth of the market; Technological innovation; Emerging technologies; Total expenditures; Global; Europe (search for similar items in EconPapers)
Pages: 28
Date: 2025-01-17
New Economics Papers: this item is included in nep-cse, nep-ict, nep-ino, nep-knm, nep-sbm and nep-tid
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