Geographical Localisation of Knowledge Spillovers by Australian Patent Citations*

Abstract

This article assesses whether knowledge spillovers are localised and then examines the determinants of localisation using patent citations of Australian patents registered with the United States Patent and Trademark Office (USPTO). Advances in communications technologies have reduced the cost of information transmission, particularly in the last three decades. However, tacit knowledge is still costly to transmit over geographical distance. The literature suggests that those individuals that are close to the source of the invention benefit more than distant ones. Australia, with its geographical isolation and large distances between its major cities, is used as testing ground for this hypothesis. The results show that there is evidence for geographical localisation of knowledge flows at various levels of geographical aggregation, the localisation effects diminish over time, and the more general patents are less localised.