Abstract
AbstractThe aim of this paper is to investigate the effects of the related and unrelated varieties on innovation considering regional heterogeneity across locations. Previous studies show that, in general, the related and unrelated varieties can affect innovation, but they rarely consider regional heterogeneity across locations. We use the regional knowledge production function with panel data on Brazilian microregions between 2002 and 2017 to analyse the effect of the related and unrelated varieties on innovation, considering the huge regional heterogeneity in Brazil. Our results show that the related variety is associated with both upper‐ and lower‐level innovation, while the unrelated variety has stronger effects on upper‐level innovation. Furthermore, the relationship between relatedness and innovation is different across Brazilian regions.
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