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Technological Diversity and Jacobs' Externality Hypothesis Revisited

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  • Ejermo, Olof

    ()
    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Abstract

Recent empirical evidence strongly supports Jacobs’ (1969) externality hypothesis, that urban diversity provides a more favorable environment for economic development. In order to correctly gauge Jacobs’ hypothesis, economic development should be understood as a result of innovations. Furthermore, it is argued that a relevant diversity-measure should take into account the degree of diversity between the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. Recent empirical evidence strongly supports Jacobs’ (1969) externality hypothesis, that urban diversity provides a more favorable environment for economic development. In order to correctly gauge Jacobs’ hypothesis, economic development should be understood as a result of innovations. Furthermore, it is argued that a relevant diversity-measure should take into account the degree of diversity between the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. The results show that the number of patent applications in Swedish regions is highly and positively dependent on regional technological specialization, quite the opposite to Jacobs’ prediction. The paper raises general questions about earlier empirical results. It is concluded that the size of regions is important is an important factor to consider, since this in itself may affect patenting intensity and technological diversity.

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Bibliographic Info

Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 16.

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Length: 39 pages
Date of creation: 29 Nov 2004
Date of revision:
Handle: RePEc:hhs:cesisp:0016

Note: Accepted for publication in Growth and Change
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Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/
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Keywords: Specialization; diversity; patenting; Sweden; regions;

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References

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Cited by:
  1. Bart Los & Carolina Castaldi & Koen Frenken, 2013. "Related Variety, Unrelated Variety and Technological Breakthroughs: An Analysis of U.S. State-Level Patenting," ERSA conference papers ersa13p524, European Regional Science Association.
  2. Sam Tavassoli & Nunzia Carbonara, 2013. "The Role of Knowledge Variety and Intensity for Regional Innovative Capability - Swedish evidence," Papers in Evolutionary Economic Geography (PEEG) 1317, Utrecht University, Section of Economic Geography, revised Oct 2013.
  3. Sofia Wixe & Martin Andersson, 2013. "Which Types of Relatedness Matter in Regional Growth? -industry, occupation and education," Papers in Evolutionary Economic Geography (PEEG) 1326, Utrecht University, Section of Economic Geography, revised Dec 2013.
  4. Arauzo Carod, Josep Maria & Faggian, Alessandra & Mañé Vernet, Ferran, 2010. "Internal and External Determinants of Radical and incremental Innovation in SMEs: the case of Catalonia," Working Papers 2072/179605, Universitat Rovira i Virgili, Department of Economics.
  5. Tavassoli, Sam & Carbonara, Nunzia, 2013. "The Role of Knowledge Variety and Intensity for Regional Innovative Capability," CITR Working Paper Series 2013/01, Center for Innovation and Technology Research, Blekinge Institute of Technology.
  6. Ron Boschma & Pierre-Alexandre Balland & Dieter Franz Kogler, 2013. "Relatedness and Technological Change in Cities: The rise and fall of technological knowledge in U.S. metropolitan areas from 1981 to 2010," Papers in Evolutionary Economic Geography (PEEG) 1316, Utrecht University, Section of Economic Geography, revised Sep 2013.
  7. Feldman, Maryann & Tavassoli, Sam, 2014. "Something New: Where do new industries come from?," CITR Working Paper Series 2014/02, Center for Innovation and Technology Research, Blekinge Institute of Technology.

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