Knowledge Spillovers, Innovation and Growth

Cohen and Levinthal (1989) introduced the notion of absorptive capacity and demonstrated that knowledge spillovers can induce complementarities in R&D efforts. We show that this idea has rich implications when analysing important aspects of the growth process such as cross‐country convergence and divergence, the international co‐ordination of climate change policies, and the role of openness in the production of ideas. We also show that the notion of absorptive capacity sets an agenda for new empirical and theoretical analyses of the role of R&D spillovers in innovation and growth. Cohen, W.M. and Levinthal, D.A. (1989). ‘Innovation and learning: the two faces of R & D’, Economic Journal, vol. 99(397), pp. 569–96.