Abstract
R&D spillovers contribute to total factor productivity (TFP) growth. This paper examines the contribution of intranational and international R&D spillovers between Canada and Japan to industrial TFP growth. TFP growth is measured and decomposed for 10 Canadian and Japanese manufacturing industries. Generally, spillovers contribute to productivity gains. We find that domestic spillovers contribute more than international spillovers. Moreover, in industries where marginal propensities to spend on R&D are relatively lower, domestic spillovers reduce TFP growth.
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