Knowledge Spillovers at the World's Technology Frontier

Abstract

Convergence in per capita income turns on whether technological knowledge spillovers are global or local. Global spillovers favor convergence, while a geographically limited scope of knowledge di#usion can lead to regional clusters of countries where di#erences in income per capita levels persist. This paper estimates the importance of geographic distance for knowledge spillovers, how this changed over time, and whether international trade, foreign direct investment, and communication ows serve as important channels for spillovers. The analysis examines the productivity e#ects of research and development expenditures in the worlds seven major industrialized countries between 1970 and 1995. I nd that (i) the scope of knowledge di#usion is severely limited by distance: the geographic half-life of spillovers, the distance at which half of the spillovers have disappeared, is estimated to be only 1,200 kilometers; (ii) technological knowledge has become signicantly more global between the e...

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