The Trilogy of Knowledge Spillovers in French Regions : A History of Nature, Channels and Boundaries

We suggest three theoretical propositions on the nature, channels and boundaries of knowledge spillovers, and we test them with knowledge production functions estimated on French NUTS 3 regions over 2002–2008. Several innovations are introduced. First, we quantify external R&D to complement the usual internal R&D variable and assess the effect of knowledge nature on knowledge spillovers. Second, we construct several measures of the quantity and quality of regional knowledge diffusion channels and introduce them in our knowledge production functions. Third, we test several spatial panel specifications to assess robustness and evaluate the geographical boundaries of various types of knowledge spillovers. All methods converge to provide evidence for the following: 1) spillovers from internal R&D are larger than spillovers from external R&D; 2) the quantity and quality of regional knowledge transmission channels are important determinants of regional innovation; and 3) industrial and technological diversity produces positive knowledge externalities, not only locally but also in the neighbourhood of French regions