Abstract

This paper explores the role of spatial effects in the innovation processes across 245 NUTS-2 European Union (EU) regions for the period 2008-2012. The goal of the paper is to verify two hypotheses. The first one deals with spatial autocorrelation, i.e., our assumption is that the regional innovation process is not a spatially isolated process but is determined by innovation activities in neighbouring regions as well. Secondly, we assume non-homogeneous responses of innovation output to changes in innovation inputs across groups of regions, i.e., a spatial heterogeneity hypothesis. Patent applications were chosen as a proxy for innovative activity and we considered research and development expenditures and human resources in science and technology as innovation inputs. In order to model the behaviour of innovative activity at the EU regional level, we constructed and estimated a spatial regional knowledge production function model and spatial regime models. The results of the analysis confirm the hypothesis that the regional innovation process is not a spatially isolated process but is also influenced by innovation activities in neighbouring regions, and we have also identified two spatial innovation regimes.

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