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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2023 Grand Challenge: Workforce Disrupted
Market-Based Solutions to Vital Economic Issues
Jun 1, 1996

R&D Spillovers and the Geography of Innovation and Production


The importance of geographic location to different types of industries is tested for by linking the geographic concentration in manufacturing industries to industry specific characteristics, most notably the relative importance of knowledge spillovers. The spatial distribution of innovative capacity as well as the geographic concentration of production are examined. The evidence suggests that, even after controlling for the degree of geographic concentration in production, innovative activity tends to cluster more in industries where knowledge spillovers play a decisive role. Although such industries also tend to exhibit a greater geographic concentration of production, the results suggest that the propensity for innovative activity to cluster is more attributable to the role of knowledge spillovers and not merely the geographic concentration of production.

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