Technology Sourcing: An Empirical Analysis Using Firm-Level Patent Data

Abstract

This paper examines whether UK firms that locate their R&D activity in the USA benefit more than other UK firms from knowledge spillovers originating from US R&D. Patent data provides a firm-level measure of the location of innovative activity, which enables the identification of knowledge spillovers associated with Our identification strategy helps to address various problems usually encountered when measuring knowledge spillovers. We find evidence for knowledge spillovers associated with technology sourcing. Our main results suggest that the increase in the US R&D stock in manufacturing over 1990-2000 was associated with on average a 4% higher level of TFP for the UK firms in our sample. This compares with an average 6.5% higher level of TFP associated with the increase in their own R&D stocks over the same period. JEL No. O32, O33, F23

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