Innovation, international R&D spillovers and the sectoral heterogeneity of knowledge flows

We analyse the relative effects of national and international, intra-sectoral and inter-sectoral R&D spillovers on innovative activity in six large, industrialized countries over the period 1980-2003. We use patent applications at the European Patent Office to measure innovation and their citations to trace knowledge flows within and across 135 narrowly defined technological fields. Using panel cointegration we show that inter-sectoral spillovers have a key impact on innovation activities and that domestic R&D has a stronger effect than international R&D. However, within technological fields, estimated international R&D spillovers are 2.4 times the national R&D effects. We find significant differences across chemicals, electronics and machinery industries.