R&D, spillovers, innovation systems and the genesis of regional growth in Europe

Abstract

Research on the impact of innovation on regional economic performance in Europe has fundamentally followed three approaches: the 'linear model' of innovation; regional innovation systems; and knowledge spillovers. Important operational and methodological barriers have however thwarted any potential cross-fertilization. In this paper we try to fill this gap by combining R&D, spillovers and innovation systems in one model for regions of the EU-25. The empirical results highlight how the interaction between local and external research with local and external socio-economic and institutional conditions determines the potential of every region in order to maximise its innovation capacity. They also indicate the importance of proximity for the transmission of economically productive knowledge, as spillovers show strong distance decay effects.