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Industry Specialization, Diversity and the Efficiency of Regional Innovation Systems



Innovation processes are characterized by a pronounced division of labor between actors. Two types of externality may arise from such interactions. On the one hand, a close location of actors affiliated to the same industry may stimulate innovation (MAR externalities). On the other hand, new ideas may be born by the exchange of heterogeneous and complementary knowledge between actors, which belong to different industries (Jacobs' externalities). We test the impact of both MAR as well as Jacobs' externalities on innovative performance at the regional level. The results suggest an inverted u-shaped relationship between regional specialization in certain industries and innovative performance. Further key determinants of the regional innovative performance are private sector R&D and university-industry collaboration.

Suggested Citation

  • Michael Fritsch & Viktor Slavtchev, 2007. "Industry Specialization, Diversity and the Efficiency of Regional Innovation Systems," Jena Economic Research Papers 2007-018, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2007-018

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    References listed on IDEAS

    1. K. Michael Ortmann, 2000. "The proportional value for positive cooperative games," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 51(2), pages 235-248, April.
    2. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, vol. 45(7), pages 1623-1630, October.
    3. Roth, Alvin E, 1979. "Proportional Solutions to the Bargaining Problem," Econometrica, Econometric Society, vol. 47(3), pages 775-777, May.
    4. Sergiu Hart, 2006. "Shapley Value," Discussion Paper Series dp421, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    5. Barry Feldman, 2000. "The Proportional Value of a Cooperative Game," Econometric Society World Congress 2000 Contributed Papers 1140, Econometric Society.
    6. repec:spr:compst:v:51:y:2000:i:2:p:235-248 is not listed on IDEAS
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    Cited by:

    1. Michael Fritsch & Viktor Slavtchev, 2007. "What determines the efficiency of regional innovation systems?," Jena Economic Research Papers 2007-006, Friedrich-Schiller-University Jena.
    2. Schimke, Antje & Teichert, Nina & Ott, Ingrid, 2012. "Impact of local knowledge endowment on employment growth in nanotechnology," Working Paper Series in Economics 38, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
    3. Valerien O. Pede & Raymond J.G.M. Florax & Henri L.F. de Groot, 2011. "Technological Leadership and Sectoral Employment Growth:A Spatial Econometric Analysis for U.S. Counties," Working Papers 11-1, Purdue University, College of Agriculture, Department of Agricultural Economics.

    More about this item


    Innovation; technical efficiency; patents; agglomeration concentration; specialization; diversity; regional analysis.;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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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