Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 16: Technological Diversity and Jacobs' Externality Hypothesis Revisited

Olof Ejermo ()
Additional contact information
Olof Ejermo: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: Ph.D. candidate in Economics, Jönköping International Business School/Internationella Handelshögskolan i Jönköping AB, P.O. Box 1026, SE-551 11 Jönköping, Sweden, Sweden

Abstract: Recent empirical evidence strongly supports Jacobs’ (1969) externality hypothesis, that urban diversity provides a more favorable environment for economic development. In order to correctly gauge Jacobs’ hypothesis, economic development should be understood as a result of innovations. Furthermore, it is argued that a relevant diversity-measure should take into account the degree of diversity between the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. Recent empirical evidence strongly supports Jacobs’ (1969) externality hypothesis, that urban diversity provides a more favorable environment for economic development. In order to correctly gauge Jacobs’ hypothesis, economic development should be understood as a result of innovations. Furthermore, it is argued that a relevant diversity-measure should take into account the degree of diversity between the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. The results show that the number of patent applications in Swedish regions is highly and positively dependent on regional technological specialization, quite the opposite to Jacobs’ prediction. The paper raises general questions about earlier empirical results. It is concluded that the size of regions is important is an important factor to consider, since this in itself may affect patenting intensity and technological diversity.

Keywords: Specialization; diversity; patenting; Sweden; regions

JEL-codes: H41; O31; O40; R12

39 pages, November 29, 2004

Note: Accepted for publication in Growth and Change

Full text files

cesiswp16.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Vardan Hovsepyan ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-01-23 23:31:18.