Handbook of Research on Innovation and Entrepreneurship
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Handbook of Research on Innovation and Entrepreneurship

Edited by David B. Audretsch, Oliver Falck, Stephan Heblich and Adam Lederer

Leading researchers use their outstanding expertise to investigate various aspects in the context of innovation and entrepreneurship such as growth, knowledge production and spillovers, technology transfer, the organization of the firm, industrial policy, financing, small firms and start-ups, and entrepreneurship education as well as the characteristics of the entrepreneur.
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Chapter 12: Knowledge Spillovers and the Geography of Innovation – Revisited: A 20 Years’ Perspective on the Field on Geography of Innovation

Maryann P. Feldman and Gil Avnimelech


Maryann P. Feldman and Gil Avnimelech INTRODUCTION Economic growth is one of the major goals of national and regional economic policy. Thus an important economic inquiry is: why do some regions grow more than others? The neoclassical answer to this question is that economic growth is determined by the stocks of capital and labor (Solow, 1956). The endogenous growth theory (Romer, 1986; Lucas, 1988) claims that another important element in determining economic growth is the stock of economic knowledge of an economy. Accordingly, knowledge impacts growth by enhancing the rate of innovation and technical change. Moreover, not only is knowledge an important factor generating growth, but, because it spills over for use by third-party agents, it is actually a prevailing powerful factor. Romer (1990) also argues that knowledge is the only factor that can be the source of long-term growth of per capita GDP, e.g. the rate of per capita GDP growth equals the rate of technological change on the steady-state growth path. Krugman (1991) argues that the most striking feature of the geography of economic activity is the concentration of production in space. Feldman (1994) and Audretsch and Feldman (1996) provide evidence that the concentration of innovation activity in space is even more dominant. This concentration of innovation activity has significant implications for regional economic growth. While, since the 1980s, many regions implemented regional development strategies based on enhancement of innovation capabilities, one major element that still differentiates the pace of innovation of different geographical regions is the level...

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