Human capital, international migration, R&D spillovers, and productivity growth: A panel data analysis

This paper focuses on the role of R&D efforts – both domestic and foreign – and human capital investments to the development of national productivity. As technology is also embodied in human capital, the paper empirically investigates the significance of labour mobility as an effective channel of R&D spillovers based on panel cointegration method. Estimates of specifications on a cross-section of 19 OECD countries during the period 1980- 1990 lend strong support to this thesis. Data indicate that international labour movement transfer technology across borders in both directions: from donor countries to host countries and vice versa. Other findings are that human capital has significant impact in R&D diffusion process as it enhances a country’s capacity to learn from a foreign technology base, and that small countries tend to benefit more from foreign R&D than large countries. The results confirm that having a better education system and more open trade and migration policies will help a country to benefit more from foreign R&D.