Abstract
AbstractProductivity across European regions is related to three types of networks that mediate R&D-related knowledge spillovers: trade, co-patenting and geographical proximity. Both our panel and instrumental variable estimations for European regions suggest that network relations are crucial sources of R&D spillovers, but with potentially different features. Both import and co-patenting relations affect local productivity directly, but spillovers from innovation-leading regions are effective only when they are import-mediated and when recipient regions have a solid knowledge base. From a policy perspective, this may frustrate recent European policy initiatives, such as Smart Specialization, which are designed to benefit all regions in Europe.
Highlights
Linkages between different peoples and countries, through trade, capital and cultural ties, have had large economic effects since the beginning of human civilization
This article contributes to the debate on knowledge spillovers showing that local productivity is affected by localized externalities, and—and to a greater extent—by network-mediated spillovers due to interregional trade and co-patenting relations
We find evidence that such knowledge intensive network linkages are directional, with less technologically advanced regions learning from R&D investments in more advanced regions
Summary
Linkages between different peoples and countries, through trade, capital and cultural ties, have had large economic effects since the beginning of human civilization. When inter-regional network linkages and a strong knowledge base are lacking, spillovers do not occur and productivity advantages boils down in only the most advanced and well-connected regions This questions policy efforts to link catching-up European regions in terms of productivity (with currently low starting values in peripheral Eastern Europe and low growth rates in Southern Europe) by the introduction of a European Research Area (Frenken et al, 2007) and smart specialization strategies (Foray, 2015). The theoretical underpinnings of spatial and network spillovers are discussed and related—in the second section of the article—to the knowledge base of learning and knowledge capabilities of people and firms in advanced regions Based on this theoretical discussion, we pose two research questions and three accompanying testable hypotheses, followed in the third section of the article by a discussion on the models, methods and data sources used in the empirical analysis. This is a much larger distance than the face-to-face impact of localized externalities literature indicates, suggesting that other or additional mechanisms functioning on different scales are at play
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