Evidence from a randomised experiment in Pakistan

Spillovers between firms, and in particular technology spillovers, play a central role in many theories of economic growth and provide the economic rationale for many industrial policies. Despite the centrality of such in theoretical and policy discussions of the growth process, the empirical evidence for their existence is weak. Our research aims to provide rigorous, experimental evidence on the presence (or absence) of technology spillovers between manufacturing firms. In order to do this, we have designed a new cutting technology that enables soccer ball manufacturing firms in Sialkot, Pakistan, to significantly reduce the amount of raw materials required to produce a soccer ball. We have randomly introduced this new technology to a group of treatment firms, and are measuring the extent to which this technology is adopted by non-treated firms that are connected to the treated firms. We will then explore connections through family relationships, supplier relationships, worker flows, and geographical proximity. The project is still ongoing and should be completed this year.