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Industrial innovation: Direct evidence from a cluster-oriented policy

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  • Falck, Oliver
  • Heblich, Stephan
  • Kipar, Stefan

Abstract

Can local industrial policies increase local firm competitiveness? Cluster-oriented policies targeted at selected industries have just such a goal and are very popular among politicians, despite the controversy surrounding these policies in academia. Thus, it would appear useful to discover if cluster-oriented policies are effective. This paper evaluates the cluster-oriented policy introduced in Bavaria, Germany, in 1999. The policy's goal was to foster innovation and regional competitiveness by stimulating cooperation. Using difference-in-difference-in-differences estimates, we find for different innovation measures that the cluster-oriented policy increased the likelihood of becoming an innovator in the target industries by 4.6 to 5.7 percentage points. At the same time, R&D expenditures decreased by 19.4% on average for firms in target industries, while access to external know-how, cooperation with public scientific institutes, and the availability of suitable R&D personnel increased.

Suggested Citation

  • Falck, Oliver & Heblich, Stephan & Kipar, Stefan, 2010. "Industrial innovation: Direct evidence from a cluster-oriented policy," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 574-582, November.
  • Handle: RePEc:eee:regeco:v:40:y:2010:i:6:p:574-582
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