Abstract
It is widely acknowledged that new technological specializations of regions are to a large extent driven by the recombination of existing knowledge and capabilities. Since this process is path-dependent and self-reinforcing, it can easily lead to technological lock-ins. A key issue is therefore to evaluate whether public policy can impact technological trajectories of regions and how it can be more effective. To address this issue, we analyze quantitatively and systematically the relation between R&D subsidies and new technological specializations of European regions from 1999 to 2010. R&D subsidies are identified by using the EU Framework Programmes (FP) from the EUPRO database, and matched with patent documents from the OECD-REGPAT database. Using a fixed-effects linear probability model, our results indicate that FP participation have a positive but relatively small effect on the development of new specializations of regions, and that it can compensate for a lack of local related capabilities. We also find evidence that R&D subsidies have the highest impact if the level of relatedness with the new technology is neither too low (policy cannot build a cathedral in the desert) nor too high (if all the capabilities are already present there is no need for policy).
Highlights
Innovation and technological change have been identified as key for regional and economic development policies, as the ability to renew and adapt their technological and industrial structure is crucial for regions to keep growing in the long-run (e.g. Nelson & Winter, 1982; Boschma & Gianelle, 2014; Balland et al, 2017)
We find evidence that research and development (R&D) subsidies have the highest impact if the level of relatedness with the new technology is neither too low nor too high
In so doing we were especially interested in whether such subsidisations are positively associated with the emergence of new specialisations and to what extent they can compensate for lacking related capabilities, allowing less related technologies to emerge in regions
Summary
Innovation and technological change have been identified as key for regional and economic development policies, as the ability to renew and adapt their technological and industrial structure is crucial for regions to keep growing in the long-run (e.g. Nelson & Winter, 1982; Boschma & Gianelle, 2014; Balland et al, 2017). Innovation and technological change have been identified as key for regional and economic development policies, as the ability to renew and adapt their technological and industrial structure is crucial for regions to keep growing in the long-run Nelson & Winter, 1982; Boschma & Gianelle, 2014; Balland et al, 2017) It has long been an effort of science, technology and innovation (STI) policies to promote inventive activities in regions with the goal of upgrading and changing their technological and industrial base. This was a special concern of the European cohesion policy. Recent research underlines the importance of such structural factors and generates a growing body of evidence, suggesting that countries and regions tend to diversify by developing new specializations in activities that are closely related to their current ones (Hidalgo et al, 2007; Rigby, 2015; Boschma et al, 2015; Petralia et al, 2017; Gao et al, 2017)
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