International Transfer of Knowledge: The Role of International Trade and Geographic Proximity

The paper examines empirically the effect of international trade and geographic proximity on knowledge inflow to Sweden. Swedish patent data is used to trace knowledge flows. Both geographic proximity and international trade are in a first estimation found to affect knowledge flows. An extreme bounds analysis is conducted on the estimated coefficients. The coefficient for geographic proximity is sensitive to the choice of included variables but the coefficient for international trade is robust. The paper concludes therefore, that international trade facilitates the exchange of knowledge