The purpose of this paper is to link the propensity for innovative activity to cluster spatially to the stage of the industry life cycle. The theory of knowledge spillovers, based on the knowledge production function for innovative activity, suggests that geographic proximity matters most in industries where tacit knowledge plays an important role in the generation of innovative activity. According to the emerging literature on the industry life cycle, tacit knowledge plays the most important role during the early stages of the industry life cycle. Based on a data base that identifies innovative activity for individual states and specific industries in the United States, the empirical evidence suggests that the propensity for innovative activity to concentrate geographically is shaped by the stage of the industry life cycle. The generation of new economic knowledge tends to result in a greater propensity for innovative activity to cluster during the early stages of the industry life cycle, and to be more highly dispersed during the mature and declining stages of the life cycle, particularly after controlling for the extent to which the location of production is geographically concentrated.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
1161.
Find related papers by JEL classification: L0 - Industrial Organization - - General O3 - Economic Development, Technological Change, and Growth - - Technological Change
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Heiko Gerlach & Thomas Rønde & Konrad O. Stahl, 2005.
"Labor Pooling in R&D Intensive Industries,"
Discussion Papers
64, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Other versions:
Oort, F.G. van & Stam, F.C., 2006.
"Agglomeration Economies and Entrepreneurship in the ICT Industry,"
Research Paper
ERS-2006-016-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
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