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Spillovers in Space: Does Geography Matter?

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  • Sergey Lychagin
  • Joris Pinkse
  • Margaret E. Slade
  • John Van Reenen

Abstract

Using US firm level panel data we simultaneously assess the contributions to productivity of three potential sources of research and development spillovers: geographic, technological, and product market ("horizontal"). To do so, we construct new measures of geographic proximity based on the distribution of a firm's inventor locations as well as its headquarters. We find that geographic location is important for productivity, perhaps dominating other spillover mechanisms, and that both intra- and inter-regional (counties) spillovers matter. The geographic location of a firm's researchers is more important than its headquarters. These benefits may be the reason why local policy-makers compete so hard for the location of local R&D labs and high tech workers.

Suggested Citation

  • Sergey Lychagin & Joris Pinkse & Margaret E. Slade & John Van Reenen, 2010. "Spillovers in Space: Does Geography Matter?," CEP Discussion Papers dp0991, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0991
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    Keywords

    R&D spillovers; geographic proximity; technological proximity; horizontal proximity; spatial econometrics;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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