EXPLORING THE LINK BETWEEN LOCAL AND GLOBAL KNOWLEDGE SPILLOVERS

We measure the effect of R&D spillovers on plant productivity by taking account of (i) the national origin of the spillovers, (ii) the mechanism through which spillovers may flow (FDI and/or imports), (iii) the sectoral scope of spillovers, as well as (iv) their geographic scope, in a single analytical framework. Our analysis is based on an exhaustive database on Irish manufacturing plants covering the period 1986-1994. The results show that while domestic plants benefit from local R&D spillovers, these spillovers are spatially bounded. Domestic plants are also able to tap into the global R&D pool, but only via the presence of multinational plants located near them. In contrast, there is no evidence that foreign affiliates located in Ireland are recipients of local R&D spillovers. Foreign affiliates do, however, gain from the size of the R&D stock in their origin country.