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R&D, innovation and economic growth: spatial heterogeneity in Europe

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  • Roberta Capello

    ()

  • Camilla Lenzi

Abstract

In this paper, we aim at re-assessing the undisputed positive relationship between innovation and economic growth by questioning the view that R&D (and formal knowledge in general) equates innovation and innovation equates regional growth. We rather propose that these linkages are strongly mediated by local territorial assets and explore this relationship at the regional level (NUTS2) for 262 regions of the European Union. In doing so, we rely upon an original database encompassing several knowledge and innovation indicators, ranging from R&D expenditures, patent data, to newly released data on different types of innovation: product, process and marketing and/or organizational innovation, derived from the Community Innovation Survey 2002-2004 wave. The data set also includes several variables aimed at capturing different elements characterizing possible different attitudes and patterns of innovation that we control for, such as regional preconditions for knowledge and innovation creation and acquisition (namely, accessibility, trust, structural funds funding, foreign direct investments). The results of the analysis confirm that R&D is an important driver of economic growth. However, this result hides a larger territorial heterogeneity and needs some qualifications. Firstly, only regions strongly endowed with elements supporting knowledge creation processes are likely to benefit from the positive returns to R&D; a critical mass of R&D investments is therefore needed in order to exploit the eventual benefits arising from increasing returns to research expenditures. Secondly, once controlling for innovative behavior, R&D does not show anymore a significant impact on GDP growth. In fact, whereas the growth benefits accruing from R&D look rather selective and concentrated in a relatively small number of regions, the benefits accruing from innovation look not only of greater magnitude but more pervasive and beneficial for a larger number of regions. From these findings, we ultimately draw ad-hoc policy suggestions.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p187.

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Date of creation: Oct 2012
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Handle: RePEc:wiw:wiwrsa:ersa12p187

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Cited by:
  1. Ernest Miguélez & Rosina Moreno, 2013. "“Do labour mobility and technological collaborations foster geographical knowledge diffusion? The case of European regions”," AQR Working Papers 201306, University of Barcelona, Regional Quantitative Analysis Group, revised Jul 2013.
  2. Ernest Miguele & Rosina Moreno, 2012. "Do labour mobility and networks foster geographical knowledge diffusion? The case of European regions," Working Papers XREAP2012-14, Xarxa de Referència en Economia Aplicada (XREAP), revised Jul 2012.
  3. Roberta Capello & Camilla Lenzi, 2013. "Territorial patterns of innovation: a taxonomy of innovative regions in Europe," The Annals of Regional Science, Springer, vol. 51(1), pages 119-154, August.

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