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An "extended" knowledge production function approach to the genesis of innovation in the European regions

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  • Sylvie Charlot
  • Riccardo Crescenzi
  • Antonio Musolesi

Abstract

The paper looks at the genesis of innovation in the EU regions in order 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. First, the KPF is "augmented" in order to control for all possible "unobservable" and "immeasurable" 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 explicitly accounting for the differences between "core" and "peripheral" 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 complementary 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.

Suggested Citation

  • Sylvie Charlot & Riccardo Crescenzi & Antonio Musolesi, 2012. "An "extended" knowledge production function approach to the genesis of innovation in the European regions," INRA UMR CESAER Working Papers 2012/7, INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux.
  • Handle: RePEc:ceo:wpaper:39
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    Cited by:

    1. Andrés Rodríguez-Pose & Marco Di Cataldo, 2015. "Quality of government and innovative performance in the regions of Europe," Journal of Economic Geography, Oxford University Press, vol. 15(4), pages 673-706.
    2. Roberta Capello & Camilla Lenzi, 2015. "Knowledge, Innovation and Productivity Gains across European Regions," Regional Studies, Taylor & Francis Journals, vol. 49(11), pages 1788-1804, November.
    3. 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.
    4. Roberta Capello & Camilla Lenzi, 2014. "Spatial Heterogeneity In Knowledge, Innovation, And Economic Growth Nexus: Conceptual Reflections And Empirical Evidence," Journal of Regional Science, Wiley Blackwell, vol. 54(2), pages 186-214, March.
    5. Roberta Capello & Camilla Lenzi, 2015. "The Knowledge–Innovation Nexus. Its Spatially Differentiated Returns to Innovation," Growth and Change, Wiley Blackwell, vol. 46(3), pages 379-399, September.

    More about this item

    Keywords

    Innovation; Regions; Knowledge production function; Europe; Semi-parametric models;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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