The relative importance of international vis-à-vis national technological spillovers for market share dynamics Keld Laursen and Valentina Meliciani The aim of the paper is to investigate the relative importance of international vis-à-vis national technological linkages for international competitiveness for 19 industrial sectors. We estimate a dynamic model with an autoregressive structure in the dependent variable. In the paper competitiveness is captured both by cost competitiveness and by technological competitiveness. The main result is that while national linkages have a positive impact on the trade balance in several sectors (mostly scale intensive and specialised suppliers), this is not the case for inter- national linkages. 1. Introduction In their book on innovation and growth in the modern economy, Grossman and Helpman (1991: chs 7 and 8) developed two sets of models, in which they made two heroic assumptions in each case, namely that technological spillovers were either purely national in scope or purely international in scope. However, in both cases the authors stressed that they were analysing extreme cases, and that reality would lie somewhere in between pure national and international spillovers (Grossman and Helpman, 1991: 208). Hence, whether national or international spillovers are the most important ones in various contexts is a question left for empirical research. In the words of Grossman and Helpman (1995: 1283): Once we recognize that firms may gain knowledge from the experience of others, a question that arises is: What is a set of others from which a given firm learns? There are at least two dimensions to this question. First, does a firm in a given industry acquire technical information from the activities of local firms in other industries? Second, does it gain such information from the activities of firms in its own industry operating in other countries? These are empirical matters that obviously may vary with the particular context one has in mind. Industrial and Corporate Change, Volume 11, Number 4, pp. 875–894 © ICC Association 2002