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Knowledge flows, knowledge externalities and regional economic development


  • Karlsson, Charlie

    () (CSIR, Blekinge Inst of Technology)

  • Gråsjö, Urban

    () (University West)


New knowledge generated by an economic agent in a region will tend over time to flow to other economic agents in the same region but also to economic agents in other regions. It is quite common in the literature to use the concept of knowledge spillovers for such knowledge flows, irrespective of whether they are intended or non-intended. The potential for intra-regional knowledge spillover effects depends on the volume and character of the generation on new knowledge in each region as well as of the general characteristics of the individual regional economic milieu, i.e., those location attributes, which are regionally trapped and which include how well integrated it is with other regions. The larger this potential, the higher the probability that firms dependent upon knowledge spillovers will locate there and the higher probability that entrepreneurs will take advantage of this potential to launch innovations and to create new knowledge-based firms. To the extent that firms and entrepreneurs can enjoy these knowledge spillovers, they represent an externality or more specifically a knowledge externality in the regional economy. Great importance is in the literature attributed to knowledge spillovers and knowledge externalities as drivers of regional economic development. Some authors, for example, claim that regional variations in localised knowledge spillovers are one of the main reasons behind regional variations in innovation performance. Against this background, the purpose of this chapter is, based upon a general characterization of knowledge flows, to analyse the character of knowledge externalities and, in par-ticular, their sources, their economic nature, their recipients, their mechanisms and channels, their geographic reach, and their economic consequences generally and for regional economic development in particular.

Suggested Citation

  • Karlsson, Charlie & Gråsjö, Urban, 2012. "Knowledge flows, knowledge externalities and regional economic development," Working Papers 2012/05, Blekinge Institute of Technology, Department of Industrial Economics.
  • Handle: RePEc:hhs:bthcsi:2012-005

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    References listed on IDEAS

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    More about this item


    Knowledge flows; Knowledge externalities; Knowledge spillovers; Regional growth;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)


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