Stocking Up: The Role of Temporal and Spatial R&D Stocks

Endogenous growth models are built around the concept of a knowledge stock. This knowledge stock can also be interpreted as a localized stock that operates at the regional level, as is common in the regional innovation systems literature. We use data from the second, third and fourth Community Innovation Surveys (covering 1994--1996, 1998--2000 and 2002--2004) to measure the build-up of knowledge at a very low regional aggregation level (“across streets and hallways”) in the Netherlands. In doing so, we account for regional agglomeration effects. We find that such local knowledge stocks have a small influence on innovation and are far outweighed by firm-specific characteristics.