Panel Cointegration Estimation of International Knowledge Spillovers

Abstract

This paper estimates the effect of international knowledge spillovers through import on a country's productivity, using panel data from 13 Organizations for Economic Cooperation and Development (OECD) countries during 1981–1999 and two alternative estimation methods for the panel cointegration model. The results confirm the robust effect of international knowledge spillovers through the flows of intermediate goods import. The magnitude of the effect is much greater in the non-G7 countries than in the G7 countries according to the fully modified ordinary least squares (OLS) estimation. By contrast, domestic knowledge capital stocks help enhance a country's productivity only in the G7 countries.