Channels of knowledge Spillover:
an Australian perspective
Sasan Bakhtiari
Senior Economist
Industry & Firm Analysis
Office of the Chief Economist
15 September 2015
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Knowledge Spillovers
Private rents to innovation
Incentive Gap
With no spillovers
Spillovers drive a wedge between
private and social benefits of R&D
•
Generate an incentive gap
•
Firms under-invest in R&D
•
The gap can be filled by R&D tax
incentives, grants and patent
protections
•
More impact if targeted at where
Spillovers happen
With Spillovers
Source: Department of Industry and Science
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Our study
Do Spillovers instigate R&D activity above
and beyond the firm’s normal course?
Notion of Spillover
A
B
Source: Department of Industry and Science
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Our study
Are Spillovers distance related?
Notion of Spillover
A
B
Source: Department of Industry and Science
C
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
What we study
The data
Novelties
•
R&D Tax Concession Data
•
Firm-level analysis
•
Department’s own admin data
•
Accounts for geography
•
All R&D active firms that
registered
•
Brings evidence on par with
other countries (US, Europe, Japan)
•
About 19,000 firms and more
than 73,000 observations
during 2001−2011
•
Spillovers to drive increased
R&D not productivity
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Channels of Spillover
Knowledge can be sourced
from various sources
The sources we account for:
•
Private source: peers,
suppliers and clients
•
Public Sources: universities
and state and federal
governments
Sources of external knowledge
University and
Government
Suppliers
Peers
Target Firm
Clients
Source: Department of Industry and Science
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
The geography of Spillovers
Geographic classification
For each firm we classify
distance to other firms as
•
Local: within 10km
of a firm
•
Regional: within 250km
of a firm
•
Remote: farther than
250km from a firm
Local to a Firm
10km
Regional to a Firm
250km
Remote to a Firm
Source: Department of Industry and Science
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Private Spillovers
We find that
Peers
Clients
Suppliers
Who: Other firms in the same
industry
Who: Firms in other
industries weighted by ABS
IO Tables
Who: Firms in other
industries weighted by ABS
IO Tables
What: Spill over but only
locally
What: Spill over and no
geographic aspect (similar
evidence for Japanese firms)
What: Spill over but only
locally
Theory: Spilling over
happens through R&D staff
interactions
Theory: Spilling over
happens through R&D staff
interactions
Theory: product or service
itself is the medium for
knowledge spillover
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Public Spillovers
We find that
Institutes of higher
education
Contribute to increased
private R&D
State Governments
Australian Government
Discourage private R&D
Discourage private R&D
Mostly conduct applied
research
Mostly conduct applied
research
Mostly conduct basic
research
*
Corollary:
Increasing focus on basic
R&D (CSIRO type) might
stimulate private R&D
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Clustering
We find that
Hypothesis
Australia
Clusters increase Spillovers by facilitating
collaborations or employee poaching
Clustering intensifies competition within the
cluster; firms spend more on R&D
Spillovers are not stronger within clusters
Generates an impression of detachment
Illustration of Clustering
Local
Source: Department of Industry and Science
Locally Clustered
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce
Further information
Contact Details
Detecting Channels of
Knowledge Spillover in
R&D Tax Data
Sasan Bakhtiari and Robert Breunig
August 2015
For further information on this research paper please contact:
Name: Sasan Bakhtiari
Section: Industry and Firm Analysis
Department of Industry & Science
GPO Box 9839
Canberra ACT 2601
Phone : +61 2 9397 1639
Email: [email protected]
Detecting channels of knowledge Spillover in R&D tax data
Sasan Bakhtiari and Robert Breunig
Sasan Bakhtiari
Senior Economist
Industry and Firm Analysis
Office of the Chief Economist
Phone:
Email:
02 9397 1639
[email protected]
Industry Innovation
Workshop 2015
15 September
industry.gov.au/oce