International R&D Spillovers

40 Pages Posted: 15 Feb 2006

See all articles by David T. Coe

David T. Coe

International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

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Date Written: November 1993


A model is presented based on recent theories of economic growth that treat commercially oriented innovation efforts as a major engine of technological progress. We study the extent to which a country`s total factor productivity depends on domestic and foreign R&D capital stocks, both proxied by cumulative R&D expenditures. We estimate our equations on a pooled data set of 22 countries during 1970-90 and interpret our results as pooled cointegrating equations. While the beneficial effects on TFP from domestic R&D is well established, we find that foreign R&D is also important. Our estimates suggest that foreign R&D has a stronger effect on domestic productivity the more open an economy is to foreign trade, and that the rate of return on R&D capital stocks is very high, both in terms of domestic output and in terms of international spillovers.

JEL Classification: O31, O40

Suggested Citation

Coe, David T., International R&D Spillovers (November 1993). IMF Working Paper No. 93/84, Available at SSRN:

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