of technological barriers (Archibugi and Pianta 1992, Breschi and Malerba 1996). Aerospace, chemicals and electrical and electronics present high barriers to entry in technological investment but also global knowledge boundaries; motor vehicles feature few innovators that are also geographically concentrated with local knowledge boundaries; mechanical equipment presents strong cumulative features in technological accumulation, but also many innovators geographically concentrated with local knowledge boundaries; finally, textiles present high pervasiveness in technological accumulation and diffusion as the many innovators are geographically dispersed with no specific knowledge spatial boundaries. 14 A priori one should expect stronger regional and cumulative effects in motor vehicles and mechanical equipment, and less so in the other sectors.

Results of the estimation of model (2.1)-(2.3) are reported in tables 6-1 1. We omit discussion of the full results and concentrate on the linkages between domestic and foreign technological specialization, i.e. the estimates of parameters ?74and i75. We consider results by sector confronting different country behavior. Case I refers to the version with _ITSF_ (US technological specialization), case 2 refers to the version with _ITSE_ (European technological specialization). The estimates for Japan refer only to the first case. _CNR2_ is the Carter Nagar statistics for simultaneous models, see Carter, Nagar (1977).

_Textiles_ In three European cases, Germany, France and Italy -see table 6- domestic technological specialization is highly correlated to US rather than to European technological specialization. With the exception of the UK, European technological specialization does not seem to exert any significant effect. The case of Japan suggests a strong effect of US technological specialization on domestic technological specialization. In general results seem to confirm the pervasive nature of technology in this sector.

_Motor Vehicles_ Results for the four European countries -see table 7- suggest a strong influence of European technological specialization on domestic technological specialization. This supports the assumption of few innovators that are also geographically concentrated with local knowledge boundaries. Significant estimates of i73, the elasticity of technological specialization with respect to production specialization, confirm the presence of a cumulative interaction between production and innovation activities. Geographical concentration also appears in the case of Japan where foreign (US) technological specialization does not significantly affect domestic technological specialization.

_Electrical and electronics_ Regional (European) technological specialization -see table 8- influences domestic technological specialization in the cases of Germany, France and the UK. In the latter two cases significant estimates of 773, the elasticity of technological specialization with respect to production specialization, confirm the presence of a cumulative interaction between production and innovation activities. In the case of the UK, however, US technological specialization apparently exerts a

**14** With respect to Pavitt's taxonomy ,adopted in the previous section, aerospace, electrical and electronics as well as chemical products are science based sectors, motor vehicles are scale intensive, mechanical equipment are specialized suppliers and textiles are traditional products.

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