Spatial Aspects of Innovation Activity in the US

This paper studies the effects of spatial concentration of innovation activity on local production of patents in the US. In doing so, we augment the standard knowledge production function with a structure that allows for spatial effects, accounting along with bilateral also for multilateral influences across states. Our findings corroborate with past evidence on the important role of state’s own R&D stock and human capital in producing new inventions. In addition, external knowledge, via spatial interactions, is also a purveyor of local innovation production. The effect is stronger when we consider spatial influences from all states, in particular from the most innovative ones, and to a lesser extent from close neighboring states. Finally, spillovers are more likely to occur between states with similar technological specialization, which share common technological knowledge and pour similar technological effort.