Granger causality test on R&D spatial spillovers and productivity growth

This paper uses panel data of Taiwanese electronics firms to investigate the Granger causality relationship between R&D and productivity growth, while taking into account the effect of R&D spatial spillovers. Unlike previous studies, the R&D spatial spillover effect is calculated by a geographic formula of longitude and latitude. Before determining the direction of causality between the TFP growth and R&D effort, we execute the panel unit root test to examine the stationarity of the data. Results indicate that all variables in the model are stationary, and that R&D stock and R&D spatial spillovers Granger cause productivity growth.