What drives technological change in regions? Relatedness and policy support in the US from 1981 to 2010

Authors: Andrea Simone*, University of Foreigners of Siena
Topics: Economic Geography, Regional Geography, United States
Keywords: diversification, technological relatedness, public policy
Session Type: Virtual Paper
Day: 4/9/2021
Start / End Time: 6:25 AM / 7:40 AM
Room: Virtual 16
Presentation File: No File Uploaded

Innovation policies are unanimously acknowledged as a major spurrer of the economic development of regions (Uhlbach, Balland, & Scherngell, 2017; Broekel & Mewes, 2017), but are seldom considered in the literature concerning regional diversification. Conversely, robust evidence has been gathered about the impact of relatedness on the ability of regions to explore new technological domains (see, e.g., Hidalgo, Klinger, Barabasi, & Hausmann, 2007; Neffke, Henning, & Boschma 2011; Rigby, 2015). Following these studies, the paper aims at assessing to what extent diversification processes in the United States, between 1981 and 2010, have been influenced by prior technological expertise in related fields and/or by R&D policies undertaken by federal agencies at the state level. A logistic regression model for longitudinal data with fixed effects has been estimated, mainly employing two sets of data: patent data from OECD REGPAT, to measure technological relatedness between 4- digit major patent classes, and data on US Federal Obligations for Research & Development. The contribution of this article is twofold. First, in line with Neffke, Hartog, Boschma, & Henning (2018), a measure of regional capability match has been developed to determine the degree of relatedness between an industry and a region overall industry mix. Secondly, this work empirically validates the hypothesis that supply-side innovation policies (Mazzucato, 2013), by means of R&D subsidies, have a measurable impact on the ability of regions to diversify. Moreover, it provides evidence on how this impact varies with respect to related and unrelated diversification processes and/or typology of subsidy recipient.

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