This paper reviews existing literature on dynamic externalities which is the fountainhead of competitive advantages, and argues that rigorous theoretical and empirical analysis is needed to increase understanding of the role of technological spillovers in generating regional growth. Empirical analysis of knowledge spillovers is broadly performed in the field of industrial organization. Recently, a number of empirical analyses aiming at verifying technological spillovers accompanying R&D
activity of companies have been conducted. In recent empirical literature on spatial agglomeration, many papers find evidence consistent with dynamic externalities. Especially, growing bodies of research have estimated the extent and type of dynamic externalities. Despite the different data sources used, methodologies are similar. As the survey of some methodologies has been carried out by McDonald (1997), this paper reviews the main
empirical analyses of dynamic externalities as the complement−positioning.