Institutions and the sources of innovation: the determinants and effects of international R%D collaboration

This paper examines the phenomenon of international R%D collaboration in the form of cross-national patenting. Using a unique dataset on patents from the USPTO for a maximum of 125 countries over the period 1975-2005, we show that, despite the potential for technological advancement arising from R%D collaboration with tier 1 countries, there is no evidence that relatively poor and open countries raise their technical efficiency by doing so. In fact, the overall picture is one in which a poor, open, developing country is hurt by tier 1 collaboration. We have also identified non-linearities in the effects of overall patenting on technical efficiency, indicating that a certain threshold in numbers of patents per capita must be reached before technical efficiency increases. These results can be attributed to the keen international competition for researchers and research investment and the inability of firms in the home country to take advantage of such patenting and attract investments.