INTERNATIONAL RESEARCH-AND-DEVELOPMENT SPILLOVERS - A COMMENT

Coe and Helpman presented evidence consistent with the hypothesis that technology spills over across countries through the channel of trade flows, and provided estimates of the magnitude of these spillovers. We re-examine two features of their econometric model. First, we argue t hat the weighting scheme they used to compute foreign R&D capital stoc ks is subject to an 'aggregation bias'. We suggest an alternative weig hting scheme that is theoretically much less biased and that yields so mewhat better empirical results. Second, we correct an 'indexation bia s' and generalise their empirical framework by analysing how the outpu t elasticity of foreign R&D depends on a country's openness to trade. The empirical results confirm that the more open to trade a country is , the more likely it is to benefit from foreign R&D. (C) 1998 Elsevier Science B.V. All rights reserved.