channels of knowledge spillover: an australian perspective sasan bakhtiari senior economist industry...
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Channels of knowledge Spillover: an Australian perspective
Sasan BakhtiariSenior Economist
Industry & Firm AnalysisOffice of the Chief Economist15 September 2015
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Knowledge Spillovers
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Spillovers drive a wedge between private and social benefits of R&D
• Generate an incentive gap
• Firms under-invest in R&D
• The gap can be filled by R&D tax incentives, grants and patent protections
• More impact if targeted at where Spillovers happen
With no spillovers
Incentive Gap
Private rents to innovation
With Spillovers
Source: Department of Industry and Science
Our study
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Do Spillovers instigate R&D activity above and beyond the firm’s normal course?
Source: Department of Industry and Science
B
Notion of Spillover
A
Our study
Industry InnovationWorkshop 2015
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Are Spillovers distance related?
Source: Department of Industry and Science
A B
Notion of Spillover
C
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What we study
Novelties
• Firm-level analysis
• Accounts for geography
• Brings evidence on par withother countries (US, Europe, Japan)
• Spillovers to drive increasedR&D not productivity
The data
• R&D Tax Concession Data
• Department’s own admin data
• All R&D active firms that registered
• About 19,000 firms and more than 73,000 observations during 2001−2011
Channels of Spillover
Target FirmSuppliers Clients
PeersUniversity and Government
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Source: Department of Industry and Science
Sources of external knowledgeKnowledge can be sourced from various sources
The sources we account for:
• Private source: peers, suppliers and clients
• Public Sources: universities and state and federal governments
The geography of Spillovers
Regional to a Firm
Remote to a Firm
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Geographic classification
Source: Department of Industry and Science
Local to a Firm
For each firm we classify distance to other firms as
• Local: within 10kmof a firm
• Regional: within 250kmof a firm
• Remote: farther than 250km from a firm
10km 250km
Private SpilloversWe find that
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Peers
Who: Other firms in the same industry
What: Spill over but only locally
Theory: Spilling over happens through R&D staff interactions
Clients
Who: Firms in other industries weighted by ABS IO Tables
What: Spill over but only locally
Theory: Spilling over happens through R&D staff interactions
Suppliers
Who: Firms in other industries weighted by ABS IO Tables
What: Spill over and no geographic aspect (similar evidence for Japanese firms)
Theory: product or service itself is the medium for knowledge spillover
Public SpilloversWe find that
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Institutes of higher education
Contribute to increased private R&D
Mostly conduct basic research
State Governments
Discourage private R&D
Mostly conduct applied research
Australian Government
Discourage private R&D
Mostly conduct applied research
Corollary:Increasing focus on basic R&D (CSIRO type) might stimulate private R&D
*
ClusteringWe find that
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Hypothesis
Clusters increase Spillovers by facilitating collaborations or employee poaching
Australia
Clustering intensifies competition within the cluster; firms spend more on R&D
Spillovers are not stronger within clusters
Generates an impression of detachment
Local Locally Clustered
Source: Department of Industry and Science
Illustration of Clustering
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Further informationContact Details
Detecting channels of knowledge Spillover in R&D tax dataSasan Bakhtiari and Robert Breunig
Sasan BakhtiariSenior EconomistIndustry and Firm AnalysisOffice of the Chief Economist
Phone: 02 9397 1639Email: [email protected]
Detecting Channels ofKnowledge Spillover inR&D Tax DataSasan Bakhtiari and Robert Breunig
August 2015
For further information on this research paper please contact:
Name: Sasan Bakhtiari
Section: Industry and Firm Analysis
Department of Industry & Science
GPO Box 9839
Canberra ACT 2601
Phone : +61 2 9397 1639
Email: [email protected]