Geographically and technologically mediated knowledge spillovers between European regions

This paper aims at investigating inter-regional knowledge spillovers across European sub-national regions. The basic questions that we wish to answer may be formulated in the following way: do regional geographical and technological proximities matter for the creation of new knowledge within the European regional landscape? After a review of the related literature, we consider a regional knowledge production function that allows for extra regional innovation-generating inputs. Accounting for regional specific social capability, this knowledge production function is applied to an extended sample of 153 European sub-national regions over the period 1989–1996. Interregional knowledge spillovers are shown to exist between geographically close regions and between regions displaying similar technological profiles. However, technological proximity and geographical proximity coincides to a certain extent. Knowledge spillovers are mainly driven by the private business sector. If knowledge spillovers occur within a given country, the national border turns out to seriously hamper interregional spillovers on the European scale.The author wishes to thank Eckhardt Bode, Henri Capron, Raymond J.G.M. Florax, Charlie Karlsson, Roger Stough and Roger Vickerman for their useful comments and suggestions. An earlier version of this paper was presented at the 41st Annual Meeting of the Western Regional Science Association in February 2002, Monterey, California.