What Do R&D Spillovers from Universities and Firms Contribute to Productivity? Plant level productivity and technological and geographic proximity in Japan

Author Name René BELDERBOS (KU Leuven / UNU-MERIT / Maastricht University) / IKEUCHI Kenta (Senior Fellow (Policy Economist), RIETI) / FUKAO Kyoji (Faculty Fellow, RIETI) / KIM Young Gak (Senshu University) / KWON Hyeog Ug (Faculty Fellow, RIETI)
Creation Date/NO. November 2022 22-E-106
Research Project East Asian Industrial Productivity
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We examine the simultaneous effects of spillovers due to R&D by universities and by firms on total factor productivity in a panel of over 20,000 Japanese manufacturing plants. Estimating geographic decay functions based on the location of the universe of manufacturing plants run by R&D conducting firms and public research institutions in Japan, we find a positive influence of both private and public technologically proximate-R&D stocks, which decay in distance and become negligible at around 500 kilometers. Decomposition analyses show that declining R&D spillovers are responsible for a substantial part of the decline in the rate of TFP growth in Japanese manufacturing. The exit of geographically proximate plants operated by R&D intensive firms, which may be associated with a relocation of manufacturing activity overseas, plays a notable role in this process and is an important phenomenon in major industrial agglomerations such as Tokyo and Osaka.