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Public policy for innovation and internationalisation: are they worth it?

Listed author(s):
  • Mariasole Bannò


  • Celeste Amorim Varum
  • Valentina Morandi

This paper investigates empirically determinants of regional growth. The scant literature that exists indicates that a region's economic growth depends to a large extent on several features of the regions themselves, which evolve slowly over time. Our results contribute to this set of literature, accounting also for policy variables, which have been by far neglected. Indeed, due to numerous market failures, measures to promote innovation and internationalization have been prominent in government policies in the last decade. This follows because, there is a consensus among academics, policy makers and practitioners that innovation and internationalization has become increasingly important for the growth of regions and countries. The effect of such ad hoc policy measures by home governments to promote innovation and internationalization has scarcely been studied, and existing studies addressing this issue have mainly a national focus. Despite the clear theoretical justification for the public support, policy makers ask for robust empirical evidence on these matters. This paper contributes to this end. The novelty of the study is in the emphasis on the impact of public policy tools (for innovation and internationalization), and on the coordination between them, upon regional growth. The study is conducted for the 20 Italian regions over the period 1998 to 2008. It tests not only the importance of regional characteristics but also the effects of public policy measures upon the regional economic growth. We focus in specific in the role of innovation and internationalization policy related measures. The results reveal the importance of regional characteristics and also of policy measures. The empirical findings are in line with the theoretical hypotheses: public incentives are key for promoting growth, and they have to be seen in the broader context of the determinants of regional growth. The paper also derives conclusions regarding the interrelationship between policies for innovation and for internationalization. Moreover, the allocation of incentives does not seem to help counterbalance the regional asymmetry, and the global processes and challenges are likely to strengthen the gap between regions.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p457.

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Date of creation: Sep 2011
Handle: RePEc:wiw:wiwrsa:ersa11p457
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  1. Andres RodrIguez-Pose & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 97-113.
  2. Riccardo Crescenzi, 2005. "Innovation and Regional Growth in the Enlarged Europe: The Role of Local Innovative Capabilities, Peripherality, and Education," Growth and Change, Wiley Blackwell, vol. 36(4), pages 471-507.
  3. Enrique López-Bazo & Francisco Requena & Guadalupe Serrano, 2006. "Complementarity Between Local Knowledge And Internationalization In Regional Technological Progress," Journal of Regional Science, Wiley Blackwell, vol. 46(5), pages 901-929.
  4. Koetter, Michael & Wedow, Michael, 2008. "Does regional redistribution spur growth?," Discussion Paper Series 1: Economic Studies 2008,28, Deutsche Bundesbank, Research Centre.
  5. Lydia Greunz, 2003. "The impact of industrial specialisation and diversity on innovation," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 46(3), pages 11-36.
  6. Jan Fagerberg & Bart Verspagen, 1996. "Heading for Divergence? Regional Growth in Europe Reconsidered," Journal of Common Market Studies, Wiley Blackwell, vol. 34(3), pages 431-448, September.
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