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Technological Diversity and Jacobs' Externality Hypothesis Revisited

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

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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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Publisher 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
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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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Related research
Keywords: Specialization; diversity; patenting; Sweden; regions;

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Find related papers by JEL classification:
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ejermo, Olof, 2007. "Regional innovation measured by patent data – does quality matter?," CIRCLE Electronic Working Paper Series 2007-08, CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy), Lund University. [Downloadable!]
  2. Ejermo, Olof, 2006. "Are quality-adjusted patents more geographically clustered than raw patent counts? Evidence using Swedish data," CIRCLE Electronic Working Paper Series 2006-14, CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy), Lund University. [Downloadable!]
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