Knowledge Flows, Structure of Innovative Activity and International Specialization

This paper is a first attempt towards the full inclusion of a group of variables greatly studied in the current literature on innovation and industrial economics -such as knowledge links and the structure of competition and collaboration in a sector -into the determinants of the international technological specialization of countries. In particular, the major role of knowledge flows across sectors indicates that knowledge is a key factor affecting specialization and that the currently used notion of inter-sectoral spillovers has to be disentangled in a more detailed way and given a more precise meaning. It also points to that fact that a lot of theses knowledge flows are captured within a country. In particular this paper uses international trade, patent and citation data at a very fine level of disaggregation. It, first, shows that the relationship between international technological and trade specialisation of countries is positive and statistically significant. This extends previous results to a finer level of disaggregation and to a more recent time span. Secondly the determinants of technological specialisation are analysed. In particular the focus has been placed on the knowledge connections among sectors (in terms of patent citations), some key structural features of technological classes related to Schumpeterian competition (such as the concentration and asymmetries in innovative activities and the emergence of new innovators) and the relevance of networks in terms of technological co-operation. These variables have in general positive effects on the international technological specialisation of countries and important differences across sectors in the relevance of the factors affecting international specialisation emerge.