Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy

No 2008/3: The Effects of R&D on Regional Invention and Innovation

Olof Ejermo () and Urban Gråsjö ()
Additional contact information
Olof Ejermo: CIRCLE, Lund University, Postal: PO Box 117, Sölvegatan 16, SE-22100 Lund, Sweden
Urban Gråsjö: University West, Postal: SE-461 86 Trollhättan, Sweden

Abstract: This paper examines the effects of regional R&D on patenting for Sweden within an accessibility framework. We use two measures of patenting: number of patents granted per capita and a composite of quality-adjusted patents which we regard as an innovation indicator, respectively. Three conclusions emerge. First, we find that the specification where innovations per capita is used as a dependent variable performs much better than with granted patents per capita for capturing relationships with regional R&D. In fact, quantile regressions over the distribution of different patenting and innovation levels per capita show that R&D efforts within regions affect innovations per capita positively, except for the regions with the lowest levels of R&D. The effects on granted patents per capita are less robust and depend inconsistently on the level of R&D. Secondly, accessibility to inter-regional R&D do not affect innovation significantly in our results, which suggests that effects are locally bounded. This implies that studies of the R&D-innovation relationship are plagued by misspecification, since studies tend to show that R&D-effects diffuse to other regions. This is also the case in our study; the inter-regional effects are an important factor for granted patents. Third, the share of university R&D of all regional R&D has no effect on patenting, which suggests that the two types of R&D are substitutes. In view of these results the recommendation must be to use quality-adjusted patents for regional innovation studies rather than patent grants.

Keywords: R&D; patenting; innovations; regions; spatial dependence.

JEL-codes: O30

27 pages, June 1, 2008

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