Abstract
This paper incorporates time-dependence into a regional knowledge production function framework. Within this setup, the long-run dynamic behaviour of R&D and knowledge has been analysed in four European countries - France, Germany, Italy and Spain - using unit root tests and cointegration techniques. We find that the regional stock of knowledge is cointegrated with R&D employment and external knowledge. Nonetheless, knowledge spillovers play a more important role in the generation and accumulation of new ideas. This suggests that innovation policies should aim at enhancing regional absorptive capacity through improvements in education and training.
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