Technology Spillovers and International Borders: A Spatial Econometric Analysis

Abstract

The borders of the EU are open for the movement of resources but still there can be some strong negative effects of international borders on productivity and knowledge spillovers compared to the internal regional borders. These negative effects could be due to language barriers, cultural differences, local rules and regulation, legal issues, property rights, etc. These effects of international borders have an economic significance that need to be controlled when analyzing the regional knowledge spillovers. This aspect related to international borders has not been fully taken into account in the existing literature related to knowledge spillovers, therefore, ignoring this effect might under-or overestimate the effect of knowledge and technology spillovers. The results show that technology and knowledge spillovers are mainly coming from internal neighbor regions only, whereas spillovers across the international borders are statistically insignificant. Moreover, the results show that not properly incorporating border effects will lead to inaccurate estimates of the spillovers.

Wage Convergence across European Regions : Do International Borders Matter?

“…Mechanisms that influence factor market integration could be language barriers, cultural differences, local rules and regulations, legal issues, or property rights. A similar argument was discussed by Naveed and Ahmad (2016a) with respect to the negative effects of borders on knowledge and technology transfers among EU border regions. Therefore, for the integration of wages in border regions, these barriers need to be reduced.…”

“…Another explanation might be that there are certain social and economic factors that serve as barriers to the wage convergence process. For instance, language barriers, cultural differences, local rules and regulations, legal issues, and property rights may reduce the process of wage convergence, as explained by Naveed and Ahmad (2016a) in the context of knowledge transfer across the international border. Therefore, for the integration of wages in border regions, these barriers may need to be reduced.…”

“…Does free trade cause dynamic reductions in the differences of commodity and factor prices or convergence in the prices? A recent study by Naveed and Ahmad (2016a) also analyzed the effect of international borders on the spillover of knowledge and technology in EU regions and indicated that knowledge spillovers largely occur regionally, within countries, and spillovers across international borders are not significant.…”

Compensation modes of border effects in cross‐border regions

“…Despite the convincing set of empirical findings thus found, only recently has this literature started directly dealing with border effects (Naveed & Ahmad, 2016). However, from the perspective of this paper, two limitations affect 6 Although Melitz (2003) and the following literature focus on the micro level, inspecting the way firms react to changing incentives, time trends can still be identified at a more aggregate level.…”

“…Despite the convincing set of empirical findings thus found, only recently has this literature started directly dealing with border effects (Naveed & Ahmad, ). However, from the perspective of this paper, two limitations affect this stream of studies.…”