Productivity Spillovers in the Global Market

  • Nazmus Sadat Khan
  • Jun NagayasuEmail author
Part of the Dynamic Modeling and Econometrics in Economics and Finance book series (DMEF, volume 27)


This paper analyzes the effect of productivity shocks originating from other countries on economic growth in the home country. Traditionally, productivity shocks have been considered as driving forces of economic growth in their home countries. However, productivity improvements occur both at home and overseas. In liberalized global markets, economic growth is, in theory, also attributable to productivity shocks from other countries. Using data from 18 countries, we show that numerous countries benefit from productivity spillovers. Nevertheless, their impacts on the economy differ according to the origin of the economic shocks. On the one hand, US shocks are rather pervasive and affect many economies and regions, regardless of their development stage. On the other hand, shocks from other country groups exert less influence over foreign economies. Thus, homogeneous effects of productivity spillovers across countries, which are often assumed in previous studies using the standard panel data and spatial models, are inappropriate. The mixed results from previous global analyses, particularly using macroeconomic data, are attributable to such heterogeneous effects of productivity shocks.


Productivity Economic growth International transmission Global vector autoregression 

JEL Classification:

C32 O47 



We would like to thank Gabriel Cordoba for the research assistance. This research was initiated when Khan was visiting Tohoku University. A financial support for travel expenses was provided by the Japan Investment Advisers Association.

Declarations of interest



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© Springer Nature Switzerland AG 2021

Authors and Affiliations

  1. 1.The World Bank (Macro, Trade and Investment Global Practise) and University of MuensterDhakaBangladesh
  2. 2.Graduate School of Economics and Management, Tohoku UniversityMiyagiJapan

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