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Innovation and Spillovers in Regions: Evidence from European Patent Data

  • Laura Bottazzi
  • Giovanni Peri

The aim of this paper is to estimate the effect of research externalities across space, in generating innovation.We do so by using R&D and patent data for eighty-six European Regions in the 1977-1995 period. We find that spillovers exist for regions within a distance of 300 Km from each other. The estimates are robust to simultaneity, omitted variable bias, different specifications of distance functions, country and border effects. The size of these spillovers is small, though. Doubling R&D spending in a region would increase the output of new ideas in other regions within 300 Km only by 2-3%, while it would increase the innovation of the region itself by 80-90%. Given the small size and the limited range of diffusion, we interpret these externalities as the result of local diffusion of non-codified knowledge, embodied in people and spreading via personal contacts. This interpretation is reinforced by the finding that the spillovers are somewhat weaker across national borders.

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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 215.

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Handle: RePEc:igi:igierp:215
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  1. Gordon H. Hanson, 1998. "Market Potential, Increasing Returns, and Geographic Concentration," NBER Working Papers 6429, National Bureau of Economic Research, Inc.
  2. Zvi Griliches, 1998. "The Search for R&D Spillovers," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 251-268 National Bureau of Economic Research, Inc.
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