The Long-Run Relationship Between R&D and Regional Knowledge: The Case of France, Germany, Italy and Spain
23 Pages Posted: 18 Dec 2015 Last revised: 30 Sep 2016
Date Written: September 25, 2016
This paper incorporates time-dependence into a regional knowledge production function framework. Within this setup, the long-run dynamic behaviour of R&D and knowledge has been analysed in four European countries - France, Germany, Italy and Spain - using unit root tests and cointegration techniques. We find that the regional stock of knowledge is cointegrated with R&D employment and external knowledge. Nonetheless, knowledge spillovers play a more important role in the generation and accumulation of new ideas. This suggests that innovation policies should aim at enhancing regional absorptive capacity through improvements in education and training.
Keywords: Knowledge production, heterogeneous panels, unit roots, cointegration, cross-sectional dependence
JEL Classification: C33, O31, O47, R11
Suggested Citation: Suggested Citation