The Location of Industrial Innovation: Does Manufacturing Matter?
AbstractWhat explains the location of industrial innovation? Economists have traditionally attempted to answer this question by studying firm-external knowledge spillovers. This paper shows that firm-internal linkages between production and R&D play an equally important role. I estimate an R&D location choice model that predicts patents by a firm in a location from R&D productivity and costs. Focusing on large R&D-performing firms in the chemical industry, an average-sized plant raises the firm’s R&D productivity in the metropolitan area by about 2.5 times. The elasticity of R&D productivity with respect to the firm’s production workers is almost as large as the elasticity with respect to total patents in the MSA, while proximity to academic R&D has no significant effect on R&D productivity in this sample. Other manufacturing industries exhibit similar results. My results cast doubt on the frequently-held view that a country can divest itself of manufacturing and specialize in innovation alone.
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Bibliographic InfoPaper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 13-09.
Length: 62 pages
Date of creation: Mar 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-COM-2013-03-30 (Industrial Competition)
- NEP-CSE-2013-03-30 (Economics of Strategic Management)
- NEP-CWA-2013-03-30 (Central & Western Asia)
- NEP-EFF-2013-03-30 (Efficiency & Productivity)
- NEP-GEO-2013-03-30 (Economic Geography)
- NEP-IND-2013-03-30 (Industrial Organization)
- NEP-INO-2013-03-30 (Innovation)
- NEP-IPR-2013-03-30 (Intellectual Property Rights)
- NEP-KNM-2013-03-30 (Knowledge Management & Knowledge Economy)
- NEP-SBM-2013-03-30 (Small Business Management)
- NEP-URE-2013-03-30 (Urban & Real Estate Economics)
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