Abstract
We develop a theoretical model that focuses on the effects of international knowledge spillovers on the country’s horizontal (variety expansion) and vertical (quality-improving) R&D efforts in less developed countries (LDC). The novelty of the approach is that it studies the effect of cross-country knowledge spillovers in the framework of a second-generation endogenous growth model without scale effect. The structure of the market, the level of R&D expenditures, and the rate of economic growth are endogenously determined by the level of knowledge spillovers. The effect of cross-country knowledge spillovers on the return to R&D is ambiguous. It depends on the relative dominance of market interaction versus technological interaction among firms in LDC. The R&D expenditures by the firms in the developed countries may reduce incentives to vertical innovations in LDC; however, our results emphasize the importance of developing domestic R&D projects and improving the efficiency of those projects for LDC rather than relying on foreign knowledge spillovers. In the presence of sunk costs, nonetheless, running efficient R&D projects is justified only when the country is relatively large in size.
| Original language | English |
|---|---|
| Journal | Journal of Industry, Competition and Trade |
| DOIs | |
| Publication status | Published - Jan 1 2019 |
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Keywords
- Economic integration
- Endogenous growth
- Knowledge accumulation
- Knowledge spillovers
- Technological diffusion
ASJC Scopus subject areas
- Industrial relations
Cite this
Cross-country Knowledge Spillovers and Innovations in Less Developed Countries in the Context of the Schumpeterian Growth Model. / Kondyan, Sergey; Yenokyan, Karine.
In: Journal of Industry, Competition and Trade, 01.01.2019.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Cross-country Knowledge Spillovers and Innovations in Less Developed Countries in the Context of the Schumpeterian Growth Model
AU - Kondyan, Sergey
AU - Yenokyan, Karine
PY - 2019/1/1
Y1 - 2019/1/1
N2 - We develop a theoretical model that focuses on the effects of international knowledge spillovers on the country’s horizontal (variety expansion) and vertical (quality-improving) R&D efforts in less developed countries (LDC). The novelty of the approach is that it studies the effect of cross-country knowledge spillovers in the framework of a second-generation endogenous growth model without scale effect. The structure of the market, the level of R&D expenditures, and the rate of economic growth are endogenously determined by the level of knowledge spillovers. The effect of cross-country knowledge spillovers on the return to R&D is ambiguous. It depends on the relative dominance of market interaction versus technological interaction among firms in LDC. The R&D expenditures by the firms in the developed countries may reduce incentives to vertical innovations in LDC; however, our results emphasize the importance of developing domestic R&D projects and improving the efficiency of those projects for LDC rather than relying on foreign knowledge spillovers. In the presence of sunk costs, nonetheless, running efficient R&D projects is justified only when the country is relatively large in size.
AB - We develop a theoretical model that focuses on the effects of international knowledge spillovers on the country’s horizontal (variety expansion) and vertical (quality-improving) R&D efforts in less developed countries (LDC). The novelty of the approach is that it studies the effect of cross-country knowledge spillovers in the framework of a second-generation endogenous growth model without scale effect. The structure of the market, the level of R&D expenditures, and the rate of economic growth are endogenously determined by the level of knowledge spillovers. The effect of cross-country knowledge spillovers on the return to R&D is ambiguous. It depends on the relative dominance of market interaction versus technological interaction among firms in LDC. The R&D expenditures by the firms in the developed countries may reduce incentives to vertical innovations in LDC; however, our results emphasize the importance of developing domestic R&D projects and improving the efficiency of those projects for LDC rather than relying on foreign knowledge spillovers. In the presence of sunk costs, nonetheless, running efficient R&D projects is justified only when the country is relatively large in size.
KW - Economic integration
KW - Endogenous growth
KW - Knowledge accumulation
KW - Knowledge spillovers
KW - Technological diffusion
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U2 - 10.1007/s10842-019-00302-7
DO - 10.1007/s10842-019-00302-7
M3 - Article
JO - Journal of Industry, Competition and Trade
JF - Journal of Industry, Competition and Trade
SN - 1566-1679
ER -