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This chapter tests the Entrepreneurial Performance Hypothesis, which suggests that the performance of knowledge-based startups should be superior when they are able to access knowledge spillovers through geographic proximity to universities as a source of knowledge. It is shown that the exact relationship between location and entrepreneurial performance is complex. The impact of geographic proximity on entrepreneurial performance is shaped by the amount and type of knowledge produced at a university. If the research output of a university is meagre, close proximity to a university will not bestow significant performance benefits. However, close proximity to a university with strong research output and spillover mechanisms enhances entrepreneurial performance.

This chapter argues that providing entrepreneurial access to knowledge spillovers through geographic proximity to knowledge sources is not sufficient; external knowledge spillovers need to be absorbed. It identifies two factors facilitating the absorption of external knowledge spillovers: a spillover conduit, such as a board director or manager, and close geographic proximity. These findings suggest not only that the composition of boards is endogenous to the relative importance of absorbing external knowledge spillovers for the entrepreneurial firm, but also that the composition of boards may be influenced by factors other than their role in controlling managers to reduce agency problems.

This chapter analyzes the role of MNCs in the development of the software industry in India, Ireland, and Israel. It shows that the evolution of software activities and the role of MNCs varied considerably across these three countries in terms of the timing of entry and the type of activities conducted by MNCs. Ireland MNCs provided the domestic industry with market access and trained managers. In Israel and India, MNCs provided finance, marketing, and managerial capabilities to domestic firms, but only after a regional software cluster had already developed. The analysis shows that people mobility and spin-offs appear to be significant, especially in Ireland. However, there was very limited evidence of MNCs technology externalities measured by patent citations.

By penetrating the knowledge filter and trying out ideas that might otherwise never have made it through, entrepreneurship serves as the missing link to innovation and ultimately economic growth and job creation. Entrepreneurship is an important mechanism permeating the knowledge filter to facilitate the spillover of knowledge and ultimately generate economic growth. Entrepreneurship provides the missing link to innovation and growth in virtually every context where people have ideas and starting a new firm is not blocked or impeded. For example, universities can be interpreted as being hotbeads for generating new knowledge and ideas. Entrepreneurship provides the vision to use this knowledge. If there is no vision there is no entrepreneurship. If there is a vision, but no action or activity, there is also no entrepreneurship.

This concluding chapter reflects on the evolution of a funded project which would come to form the publication of this volume. In doing so, the chapter returns to the main themes and ideas drawn from the rest of the book in exploring further insights into the dynamics of multiple networks. The previous chapters have shown how behavior from one realm often spills over into another, sometimes with dramatic consequences. Exactly when such perturbations happen and with what consequences are a research agenda for the future. The chapter fleshes out this discussion with a clearer specification of different types of spillovers. The critical element is that parts of life from one domain find a commonality, utility, or simply a resonance in a different and unexpected domain.

This chapter examines social interactions in human capital spillovers by focusing on spatial patterns in productivity, wages, and incomes, with particular emphasis on whether spatial concentration causes higher productivity. It begins with a discussion of aggregative spatial measures, such as economic activity at the level of states, regions, and counties in comparison with the smaller scale of cities and their neighborhoods. It then considers the interdependence between spatial interactions and spatial economic activity, the implications of spatial equilibrium for the urban wage premium, and human capital spillovers in microneighborhoods and in synthetic neighborhoods. It also shows how differences in patterns of productivity across locations and at different scales of spatial aggregation may be rationalized in terms of simple models of social interactions.

Foundational ‘bounded container’ models of demography do not allow for spillovers or subdivisions, and hence yield misleading statistical means. Four other spatial models are presented; a space of ‘flows’ is preferred because it accounts well for mid‐nineteenth‐century migration in the American North. Men born in different regions within New England, and into rich and poor social classes, entered different migration streams.

This chapter uses the economic concept of externalities to evaluate the positive spillovers that exist in health interventions. It argues for mainstreaming AIDS prevention by addressing a broad array of development problems, rather than by employing a just-in-time approach to HIV intervention. It demonstrates that non-health investments are often the best way to achieve health goals, such as increasing the efficiency of customs regulations at border posts to reduce the spread of HIV along trucking routes. It also argues for broad community health programs that exploit economies of scale and scope.

We live in a “brave new world” in which allocative decisions on public goods today can have consequences that cross political and generational boundaries. Although the international aspects of public goods have received much attention in recent years, particularly with respect to environmental activities, intergenerational public goods have received relatively scant attention.

In response, this chapter has five main purposes. First, it presents a taxonomy of public goods with benefits spanning generational or national boundaries. Second, it describes the implications for economic efficiency of a variety of public goods that affect nations or generations. Third, it explores the strategic aspects of intergenerational public goods. Fourth, it offers design principles for institutional arrangements, intended to address concerns about the allocation of transgenerational public goods. Fifth, the analysis is applied to specific cases of intergenerational public goods throughout. A number of policy insights derive from this analysis. At the national level, decision‐makers are unlikely to achieve optimal levels of these public goods. If intergenerational awareness of public goods spillovers is only encouraged within a country, then that country's well‐being may actually deteriorate as others free ride on its enhanced far‐sightedness. Thus, cooperation and increased awareness of spillovers must have both an international and an intergenerational dimension for all nations to gain.

This chapter first presents a model of learning‐by‐doing and learning from others in which farmers learn about the optimal target input for a new technology by observing the input choice and yield on their own and on neighbouring farms. Because of this ‘social learning’, dynamic considerations become relevant to the technology adoption decision. It is shown how, in the presence of information spillovers, adoption by a farmer is part of a dynamic game in which the expected level of experimentation by neighbours matters. The next section presents a model of technological change where training is complementary to the new technique. The model illustrates how imperfections in the labour market result in an under‐investment in training, and how an economy may get trapped in a poor equilibrium in which insufficient training and insufficient adoption reinforce each other.

Starts with an illustration of the effect of growth on the terms of trade between a rich and a poor country, using a simple comparative‐static framework. Next, we study the pro‐competitive effects of trade liberalization in inputs with a model in which an import‐substituting upstream industry supplies an intermediate good to the producers of the final good. With imperfect competition and scale economies among upstream firms, the model has multiple equilibria, and trade liberalization may trigger an expansion to the higher output equilibrium. The next section is about the effects of trade on economic development as analyzed in endogenous growth theory, with its focus on learning‐by‐doing, dynamic learning spillovers, and trade‐induced technological patterns in growth. This section includes a model of North–South trade that endogenizes comparative advantage and the direction of technological specialization.

The world of public goods has changed radically in the past quarter century, rendering some textbook discussions and examples quite dated. This is a good time to take a fresh look at both the nature of public goods and the policy options for managing their provision. Privatization and technological advances have combined to change the very nature of public goods provision in many respects. In the environmental field, in addition, there exists a growing volume of privately produced global public bads, such as pollution. In response, Heal suggests using markets to foster the private provision of public goods. If properly structured, markets can solve the problems posed by this type of good. The chapter describes how a global market in pollution permits could reduce pollution levels while assuring an efficient and equitable distribution of the costs of emission reductions. In a second example of the power of markets to overcome cooperation dilemmas, Heal describes how early actions by large firms or countries can accelerate environmental reforms by smaller actors through a process of adoption spillovers.

Through an interesting dynamic, there is at present an interesting intersection of two literatures – that on conventional foreign aid and that on global externalities and public goods. Some of the key questions that emerge from this are (1) Could international public goods and cross‐border spillovers provide a revived rationale for old‐fashioned transfers intended to spur development in poor countries? (2) When faced with the choice of making transfers or contributing to an international public good, what should a donor country do – even if its objectives are governed by self‐interest rather than solidarity? (3) What happens to the many issues (like conditionality and ownership) in old‐fashioned solidarity‐driven aid, so exhaustively and exhaustingly debated over the past 20 years or more, in this new world of international public goods?

The objective of this chapter is to begin the discussion of these questions, which seem to have been neglected in the rush to embrace international public goods as a new rationale for maintaining international development cooperation and even traditional aid flows. We set out a simple model of interaction between two countries that share a common public good and pose the problem of the richer “donor” country deciding between making a transfer or contributing to a public good, while being concerned only about the impact of outcomes on its own well‐being. We next analyze the problem with different specifications of the public good. We conclude by discussing the implications of this analysis and the areas for further research.

This chapter provides a systematic analysis of the role of special economic zones (SEZs) in industrialization, modernization, and economic restructuring in India by focusing on those economic aspects of SEZs which are not easily quantifiable. These are, for instance, technology transfers, technological spillovers, and backward and forward linkages. In particular, it analyses the impact of SEZs on productive and regional diversification through direct and indirect channels. The analysis is based on field surveys conducted during 2006–9. The analysis shows that SEZs have the potential of being a catalyst in the process of industrial diversification in India. Unfortunately, these are not fully appreciated. It requires strategic planning to exploit the SEZ-induced agglomeration effects by facilitating the growth of local networks.

This chapter describes the university research park (URP) organizational structure through which government acts as entrepreneur. Government allocates funds to support URPs. The allocation of these funds is direct, in terms of state resources earmarked for the creation of a park, as well as indirect in the sense that a state university allocated its operating funds for the creation and ongoing activities of the park. This chapter focuses on the government's indirect involvement in support of such public/private partnerships.

Economists have made countless efforts to understand Robert Solow's productivity paradox wherein computers have somehow become present in several different aspects except in the productivity statistics since evidence has yet to be derived from empirical studies that suggest the link between productivity growth and investing in information technology (IT). However, some studies have found important links which involve how the information and communications technology sector plays no small part in terms of R&D endeavours, and that the leading industrial countries have allocated much of their resources to R&D because this entails significant returns. This chapter aims to examine the empirical findings regarding R&D spillovers in the international scene, specifically the ones which concern IT and the spillovers from developed to developing countries.

This chapter speculates that technological spillover effects may have become more important over time as information technology (IT) penetrated the US economy. The rationale is that IT may speed up the process of knowledge transfer and make these knowledge spillovers more effective. Using US input-output tables for years 1958 through 2007, the chapter compares my new results with Wolff and Nadiri (1993) covering years 1947–1977 and Wolff (1997) covering 1958–1987. The chapter estimates that the direct rate of return to R&D is now 22% and the indirect rate of return to R&D is 37%. The former is higher and the latter has a higher significance level than in the previous studies. Separate regressions on the 1958-1987 and 1987-2007 periods and the addition of successive periods to the sample also suggest a strengthening of R&D spillovers between the 1958–1987 and 1987–2007 periods. These results suggest a strengthening of the R&D spillover effect over time.

The purpose of this chapter is to catalogue the contribution of Jaffe Feldman Varga that simultaneously and independently sparked a search for the mechanism of knowledge spillovers. Building on the work of Griliches Adam Jaffe was the first to identify the extent to which university research spills over into the generation of commercial activity. Building on Jaffe’s work, Maryann Feldman at Carnegie Mellon University expanded the knowledge production function to innovative activity and incorporated aspects of the regional knowledge infrastructure. Attila Varga at West Virginia University extends the Jaffe-Feldman approach by focusing on a more precise measure of local geographic spillovers. Varga approaches the issue of knowledge spillovers from an explicit spatial econometric perspective. The Jaffe-Feldman-Varga spillovers take us a long way toward understanding the role of knowledge spillovers in technological change. Building on this foundation the model has been recently extended to identify entrepreneurship as a conduit through which knowledge spillovers contribute to economic growth.