Centrality in Production Networks and International Technology Diffusion

Abstract

This study examines whether the structure of global value chains (GVCs) affects international spillovers of research and development (R&D). Although the presence of ``hub'' countries in GVCs has been confirmed by previous studies, the role of these hub countries in the diffusion of the technology has not been analyzed. Using a sample of 21 countries and 14 manufacturing industries during the period 1995-2007, I explore the role of hubs as the mediator of knowledge by classifying countries and industries based on a ``centrality'' measure. I find that R&D spillovers from exporters with High centrality are the largest, suggesting that hub countries play an important role in both gathering and diffusing knowledge. I also find that countries with Middle centrality are getting important in the diffusion of knowledge. Finally, positive spillover effects from own are observed only in the G5 countries.