The United States is the main source of cited works—a constant in recent decades.
However, citations to Chinese science have grown strongly since 2005 (albeit from a low base), as have citations across Asian countries. In general, regions tend to exhibit home bias, citing their own scientific works more than others do
Across Space
Basic knowledge diffuses more strongly than applied knowledge, Country borders, lack of a common language, and specialization distance all present a larger impediment to the diffusion of applied knowledge
The marginal effect of geographic distance is negative for basic knowledge but insignificant for applied knowledge. Patent-to-patent citation intensity for applied knowledge is instead likely more dependent on other factors, such as tough competition
Over Time
Basic knowledge displays a long-lasting impact
Knowledge Stocks and the Production Function for Ideas
Domestic basic and applied research each have positive effects on patenting activity and are of similar magnitudes
Foreign basic research also has a sizable effect, but foreign applied knowledge has a negative estimated impact on patenting activity.
However, this is very imprecisely estimated.
Differences in the Ideas Production Function: Advanced versus Emerging Market and Developing Economies
1. Access to foreign research has a larger estimated effect on innovation in emerging markets than in advanced economies for both applied and basic research
2. While the estimated effect of applied research on innovation is not significantly different across emerging markets and advanced economies, basic research seems to play a larger role in emerging markets.
The Production Function for Goods and Services
The estimated relationship between innovation and productivity is strong and significant. The relationship is stronger for countries with higher financial development and more years of schooling
Putting It All Together
Overall, international productivity spillovers are significant, particularly from basic research
Policy Experiment: Scientific Decoupling between the United States and China
As a purely illustrative example, full decoupling, as modeled by citations between the two countries shrinking to zero, is estimated to reduce global patent flows by
4.4 percent and global productivity by 0.8 percent
