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An 'extended" Knowledge Production Function approach to the genesis of innovation in the European regions

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  • Charlot, S.
  • Crescenzi, R.
  • Musolesi, A.

Abstract

The paper looks at the genesis of innovation in the EU regions in ordre to shed light on the link between innovative inputs (R&D and Human Capital) and the genesis of economically valuable knowledge. The 'traditional' regional Knowledge Production Function (KPF) is innovatively developed in three complementary directions. Firs, the KPF is 'augmented' in order to control for all possible 'unobsrevable' and 'immesurable' time varying factors that influence the genesis of innovation (i.e. localised institutional and relational factors, regional innovation policies). Second, a semi-parametric approach that relaxes any arbitrary assumption on the 'shape' of the KPF is adopted. Finally, the assumption of homogeneity in the impact of R&D and Human Capital is relaxed by explicity accounting for the differences between 'core' and 'peripherial' regions. The econometric results confirm the importance of accounting for time varying unobserved heterogeneity through the adoption of a 'random growth' specification: R&D efforts exert a significant influence on innovation only after controlling for regional specific time varying unobserved factors. In addition, the semi parametric approach uncovers significant threshold effects for both R&D expenditure and Human Capital and highlights a strong complementarity between these two factors. However, 'core' regions benefit from a persistent advantage in terms of the 'productivity' of their innovation inputs. This has important implications for the EU innovation policies at the regional level.

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Bibliographic Info

Paper provided by Grenoble Applied Economics Laboratory (GAEL) in its series Working Papers with number 2012-06.

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Date of creation: 2012
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Handle: RePEc:gbl:wpaper:2012-06

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Related research

Keywords: INNOVATION; REGION; KNOWLEDGE PRODUCTION FUNCTION; SEMI PARAMETRIC MODEL; EUROPE;

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Cited by:
  1. M. Foddi & S. Usai, 2012. "Regional innovation performance in Europe," Working Paper CRENoS 201221, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  2. Andrés Rodríguez-Pose & Marco Di-Cataldo, 2014. "Quality of government and innovative performance in the regions of Europe," Papers in Evolutionary Economic Geography (PEEG) 1406, Utrecht University, Section of Economic Geography, revised Feb 2014.

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