International R&D Spillovers and Business Service Innovation

A major international transmission channel of productivity increases is trade in intermediate products and services. This paper follows existing literature to analyse international spillovers at the industry level, extending the analysis to investigate the importance of spillovers from services sector in this framework. The analysis makes use of newly available data on international input-output linkages between industries. Our results indicate significant positive productivity effects from innovation in knowledge-intensive, high-technology business services and confirm the productivity effects from international manufacturing spillovers found in recent literature.