EXPLORING THE LINK BETWEEN LOCAL AND GLOBAL KNOWLEDGE SPILLOVERS: Evidence from Plant-Level Data

We investigate the existence of local (i.e. within-country) and global (i.e. between-country) knowledge spillovers within a single analytical framework. Our analysis is based on an exhaustive database on Irish manufacturing plants covering the period 1986-1994 and focuses on the impact of R\&D spillovers on productivity. Our results show that while the R\&D undertaken by multinationals active in Ireland has had no significant impact on local plants’ productivity, these multinationals have, nevertheless, through their presence, favoured the diffusion of global R\&D spillovers. We furthermore show that while domestic plants benefited from R\&D spillovers emanating from other domestic firms, these spillovers had a much more limited spatial scope compared to multinational-presence induced spillovers. Foreign affiliates in turn, have directly gained from the size of the R\&D stock in their origin country, but there is no evidence that foreign affiliates located in Ireland had benefited from local R\&D spillovers.