Effects of Knowledge Spillovers on Knowledge Production and Productivity Growth in Korean Manufacturing Firms

Using Korean firm‐level data, this paper studies the effects of knowledge spillovers on knowledge production and productivity growth. Data from 213 Korean firms for the years 1985 to 2007 are used, and the number of patent applications is used as a proxy variable for knowledge. The results show that all the growth rates of output, patents, and productivity are higher in high‐technology firms. Regression results show that the spillover effect on knowledge production and productivity growth is very significant, and that the spillover effect is larger in small firms than in large firms. Moreover, spillover effects on productivity growth are larger after 1995, when Korean intellectual property rights were strengthened. Our findings suggest that the effects of knowledge spillover on productivity are positively correlated with strong intellectual property rights.