Identifying The Knowledge Spillover Hotspot and its Role in Neighbouring Country Innovation

Abstract

The study specifically investigated R&D spillover and explicit knowledge spillover hotspots in the manufacturing sectors of Europe and their effects. Data for the study is unstructured and sourced from the World bank with the longest spans being 2005 to 2020 and shortest being 2013 to 2017. In all, nine countries were sampled based on data availability for the study. These countries include Poland, Germany, Slovakia, Slovenia, Lithuania, Belgium, France, Spain and Czech Republic. The study employed panel data analysis. Based on the Hausman test, fixed effect model was chosen as against random effect model. The results of the study show that after controlling for institutional and economic factors and ensuring robustness against heteroskedasticity and autocorrelation R&D spillover hotspots in Europe include Germany and Slovakia whereas explicit knowledge spillover hotspots are Poland, Slovenia, Lithuania and France. The results of the study have shown that the relationship between knowledge spillover from the hotspot countries and surrounding country’s innovation varies. For some of the hotspots, the relationship is linear whilst in others the relationship is nonlinear. The study also confirm that explicit knowledge is more susceptible to Knowledge spillover.