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Andrés Rodríguez-Pose and Callum Wilkie

According to prevailing theories of agglomeration, location and innovation, innovative capacity and innovative activity are predisposed to concentrating in the ‘economic cores’ of the world. This would ultimately result in the emergence of a geography of innovation characterized by spatial imbalances and a distinct ‘urban’ or ‘city bias’. Some empirical evidence from both the developed and developing world would seem to validate this expectation – many core cities host a disproportionately large amount of innovative activity. There is also, however, growing empirical evidence indicating that spatial patterns of innovation are evolving and that, as a consequence, a more nuanced view of the geography of innovation would be necessary. The aim of the chapter is to explore the subtly evolving geography of innovation from both a theoretical perspective as well as an empirical one. More specifically, the chapter reviews the various theories that predict the concentration of innovation in large, core cities by exploring, using patent data, the spatial patterns of innovation in five developed and emerging countries. The chapter provides first order insights into the way in which the global geography of innovation is changing, and offers an interpretation and explanation for this evolving geography of innovation that feeds directly into a discussion of the policy implications associated with the gradual spatial dispersion of knowledge-intensive, innovative activity.
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Innovation and competitiveness in the periphery of Europe

Contemporary Theories and Perspectives on Economic Development

Andrés Rodríguez-Pose and Callum Wilkie

The European Union (EU) is confronted with a host of ‘knowledge-related pressures’ from an evolving geography of innovation. Simply stated, the EU is in the unenviable position of losing ground to the United States in terms of knowledge production, research and innovation, whilst becoming increasingly susceptible to competition from emerging economies. The EU has responded to these pressures and the need to foster innovation by prioritizing research and development (R & D) investment. Such a strategy, however, may benefit some member states to a greater extent than others. More developed, ‘core’ territories are more conducive to knowledge-intensive, innovative activity and can better capitalize on increased R & D expenditure. Lagging, peripheral territories, on the other hand, are burdened by a host of structural, socioeconomic and institutional deficiencies that may inhibit the emergence of knowledge-intensive activity. The distance between the capabilities of peripheral regions and the technological frontier may be too great to overcome. The aim of this chapter is to address these concerns and assess the effectiveness of the EU’s approach. It explores whether increases in R & D investment have enhanced the innovative capacities, impelled economic growth, or improved labour market outcomes in the peripheral regions of the EU. The chapter undertakes an exploratory analysis of the correlations between increased R & D investment and changes in innovative capacity and socio-economic development within the EU. Factors which may explain these limited returns to R & D expenditure in peripheral territories are explored. The chapter concludes by introducing a series of policy implications formed on the basis of the analysis.