INNOVATIVE BEHAVIOR AND SPATIALLOCATION – USING PATENT COUNTS ANDGEOGRAPHIC LOCATION TO ESTIMATEINNOVATIVE SPILLINS

In this paper we examine the relation between geographic location and innovative behavior.Knowledge spillins, as opposed to knowledge spillovers, are modeled as an externality which existsbetween geographically close economic agents and enters the representative inventor productionfunction explicitly from neighboring regions. To proxy new innovative behavior and new knowledgegenerated we use counts of patent filings per county. The proposed geographic spillin is tested for theUS Midwestern States of Iowa, Minnesota, Missouri, Kansas, Nebraska, South Dakota and NorthDakota using a newly constructed data set and implementing spatial statistical methods. The data setis comprised of primary inventor utility patent filings per county for the years 1975-2000. The resultsdo indeed suggest spatial interaction does occur and innovative activity in surrounding counties is animportant factor in explaining new innovative behavior. Further analysis also reveals lagged patentingbehavior within the county also has a significant impact on patenting activity suggesting innovativeexternalities exist over both space and time.[...]