External Knowledge, R&D, and Innovation: Mapping the Market for Technology Across European Industries
IMF Working Papers, January 17, 2025
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- External Knowledge, R&D, and Innovation: Mapping the Market for Technology Across European Industries
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Bibliographic details
- Authors: Christoph Grimpe, Fuad Hasanov, Wolfgang Sofka, Geoffrey Borchardt, Philip Schulz
- Published: January 17, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400297915.001
Research question and data
- Objective: Study the key determinants driving the market for technology (external knowledge) and how expenditures on external knowledge depend on sectoral patterns of innovation and an industry’s distance to the global technological frontier.
- Data and scope:
- Panel of 20 industries across 24 European countries.
- Publication details: IMF Working Papers, Working Paper No. 2025/020, Issue 020, Pages: 28, Volume: 2025.
- Authors: Christoph Grimpe, Fuad Hasanov, Wolfgang Sofka, Geoffrey Borchardt, Philip Schulz.
- Date: January 17, 2025.
- DOI: https://doi.org/10.5089/9798400297915.001
- ISBN: 9798400297915
- ISSN: 1018-5941
- Stock No: WPIEA2025020
Key empirical findings
- General role of markets for technology:
- A well-functioning market for technology, or ideas, is an important determinant for the type, scope, and distribution of innovation activities.
- Relationship between knowledge dissemination and external knowledge expenditures:
- Disseminating knowledge and technology within the industry, bringing it closer to the global technological frontier, tends to reduce the expenditures for external knowledge except in supplier-dominated industries.
- Complementarity effects in the market for external knowledge:
- Industries with high R&D spending foster growth of the market for technology.
- Industries with increasingly large firms foster growth of the market for technology.
- Industries with large investments in machinery and software foster growth of the market for technology.
Interpretation and implications
- Mechanisms:
- Proximity to the global technological frontier via within-industry dissemination reduces reliance on external knowledge purchases in most industry types.
- Supplier-dominated industries are an exception where bringing knowledge closer to the frontier does not reduce external knowledge expenditures.
- Complementarities across R&D spending, firm size, and capital investments (machinery and software) expand the market for technology.
- Policy-relevant insights:
- Innovation policies should be tailored to industry-specific conditions.
- Policies that expand both the size of the market for technology and the use of these markets in specific industries are suggested by the findings.
Subjects and keywords (as listed)
- Subject: Emerging technologies, Expenditure, Technological innovation, Technology, Total expenditures
- Keywords: Emerging technologies, Europe, external knowledge, Global, IMF working paper 25/20, industrial policy, industry studies, innovation activity, innovation policy, market size, Markets for technology, patterns of innovation, R&D, software foster growth of the market, Technological innovation, Total expenditures
IMF Working Paper: "External Knowledge, R&D, and Innovation: Mapping the Market for Technology Across European Industries", Christoph Grimpe, Fuad Hasanov, Wolfgang Sofka, Geoffrey Borchardt, Philip Schulz, January 17, 2025.
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- Working Paper