Knowledge Spillovers and Local Innovation Systems: A Critical Survey.

This paper re-examines critically the growing literature on localized knowledge spillovers (LKSs), and finds the econometric evidence on the subject still lacking a firm theoretical background, especially in relation to the more recent developments in the economics of knowledge. LKSs as externalities are too narrow a concept to embrace the wide variety of knowledge transmission mechanisms that may, or may not, spread ideas and expertise while keeping the diffusion process bounded in space. Copyright 2001 by Oxford University Press.