Knowledge Spillovers through International Supply Chains

Using industry-level R&D and patent data for a sample of 29 countries for the period 2000-2008, we study the importance of international supply linkages for knowledge spillovers. We find a statistically significant effect of supply chains on international knowledge spillovers. We show that knowledge spillovers increase with the intensity of supply chains linkages between countries. We also show that the evidence that knowledge spillovers flow along the supply chains is more robust than the traditional finding that knowledge spillovers depend on geographical distance or trade flows. Our findings support policies that favour participation in supply chains to foster economic development, but also show that potential gains depend on the type of participation.