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The Transmission of Sectoral Shocks Across the Innovation Network

Christian Fons-Rosen and Zhaoxin Pu
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Christian Fons-Rosen: University of California, Merced
Zhaoxin Pu: MPI-IC Munich

No 229, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Recent innovation literature has documented the benefits of cross-pollination of ideas across a wide set of industries and technology fields in an economy. Industrial and trade policies, by contrast, tend to favor economic specialization through the promotion of selected sectors. In this paper we use a firm-level panel of 13 European countries to assess whether an industry-specific policy propagates across the network of innovating firms through technological linkages. Following the competition shock to the European textile sector, triggered by the 2001 removal of import quotas on Chinese textiles, we find that patenting and knowledge sourcing behavior of non-textile firms are negatively affected. At the aggregate regional level, this indirect effect on non-textile firms can be around three to five times larger than the direct effect.

Keywords: technological linkages; spillovers; patents; knowledge sourcing; industrial policy (search for similar items in EconPapers)
JEL-codes: D57 L25 L60 O33 O38 (search for similar items in EconPapers)
Date: 2020-01-22
New Economics Papers: this item is included in nep-bec, nep-cse and nep-sbm
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