Innovation Performance and International Knowledge Spillovers: Evidence from the Renewable Energy Sector in OECD Countries

This paper aims at evaluating the sources of differences among countries' innovative performances in the renewable energy (RE) sector. Namely, we focus on the national innovative capacity, the knowledge developed abroad and the related knowledge spillovers. We claim that a country is more likely to develop RE innovation: (i) the larger the knowledge stocks of other countries in the same sector; (ii) especially when those other countries share established linkages with the focal country. Relying on a knowledge production function, we model country-level innovative performances in the RE sector for 18 OECD countries in the period 1990-2006. Our findings confirm that, once controlling for climate-energy policies, international knowledge spillovers contribute significantly to RE innovation, and their effect is comparable with domestic R&D and human capital. In addition, international spillovers are more likely if countries share stronger linkages.