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on Innovation |
| By: | D’Alessandro, Francesco; Santarelli, Enrico; Vivarelli, Marco |
| Abstract: | This study examines how regional technological relatedness and local AI knowledge influence regional innovative activity, as measured by patenting activity. Using a novel three-way longitudinal dataset (670 four-digit CPC classes × 302 NUTS-2 regions × nine four-year periods, 1986–2021) and leveraging a deep learning-based identification of AI patents, we show that two broad mechanisms operate in parallel. First, in accordance with the extant literature, technologies that are cognitively close to a region’s existing patent portfolio enjoy higher patenting activity, confirming that relatedness remains a strong and persistent predictor of innovative output. Second, local AI endowments are positively associated with patenting across technological fields, even after conditioning on relatedness, indicating that AI plays an enabling and cross-cutting role in a given regional innovation system. Moreover, the interaction between relatedness and AI turns out to be negative and statistically significant, implying that AI attenuates the extent to which local innovative efforts depend on the technology’s proximity to the regional portfolio. In sum, AI appears to enhance overall local innovative activity while reducing its reliance on pre-existing regional knowledge structures. |
| Keywords: | Artificial intelligence, AI, regional innovation, relatedness, Technological change |
| JEL: | O31 R11 |
| Date: | 2026–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2026012 |
| By: | Adi Weidenfeld; Tom Broekel; Nick Clifton |
| Abstract: | The Regional Innovation Systems (RIS) framework explains regional innovation performance primarily through structural conditions and external knowledge flows. While this perspective has generated influential typologies and policy models, it offers limited insight into how RISs emerge and transform from within. This paper advances a dynamic perspective that conceptualises RIS development as a continuum from fragmented interaction to systemic integration. We argue that generative network mechanisms and systemic dimensions co-evolve recursively, enabling or constraining the formation of integrated RISs. By shifting attention from static structures to self-reinforcing dynamics, the framework provides a foundation for understanding RIS formation, transformation, and reversibility, and suggests a more adaptive, mechanism-oriented approach to policy. |
| Keywords: | regional knowledge networks, regional innovation systems, network evolution, evolutionary economic geography, institutions |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2614 |
| By: | Jantos, Louisa; Dekker, Thekla; Bizer, Kilian |
| Abstract: | Institutions shape the conditions under which entrepreneurship and innovation unfold, yet how their degree of openness mediates sustainability-oriented development trajectories remains systematically underexplored. Drawing on 98 expert interviews across four high-performing European innovation regions, Helsinki, Copenhagen, Stockholm, and Zürich, we develop and empirically ground a multi-dimensional framework of institutional openness as a dynamic regional capacity. Our findings reveal that institutional density is a necessary but insufficient condition for sustainability-oriented regional development: what matters equally is institutional permeability-the table to which regional configurations remain open to external actors, knowledge, and alternative development trajectories. Helsinki's highly integrative configuration stands in marked contrast to Zürich's more fragmented one, with Copenhagen and Stockholm occupying distinct intermediate positions. The interaction between formal and informal institutional dimensions, and the underappreciated role of intermediary organizations, critically determines whether regions can redirect entrepreneurship and innovation toward sustainability goals. We derive implications for place-based innovation policy. |
| Abstract: | Institutionen prägen die Bedingungen, unter denen Unternehmertum und Innovation entstehen, doch wie ihr Grad an Offenheit nachhaltigkeitsorientierte Entwicklungspfade beeinflusst, ist bislang systematisch untererforscht. Auf der Grundlage von 98 Expert*inneninterviews in vier leistungsstarken europäischen Innovationsregionen - Helsinki, Kopenhagen, Stockholm und Zürich - entwickeln und verankern wir empirisch einen mehrdimensionalen Rahmen institutioneller Offenheit als dynamische regionale Kapazität. Unsere Ergebnisse zeigen, dass institutionelle Dichte eine notwendige, aber nicht hinreichende Bedingung für nachhaltigkeitsorientierte Regionalentwicklung ist. Ebenso entscheidend ist institutionelle Permeabilität, das Ausmaß, in dem regionale Konfigurationen gegenüber externen Akteur*innen, Wissen und alternativen Entwicklungspfaden offen bleiben. Helsinkis hochintegratives Institutionengefüge steht in deutlichem Kontrast zu Zürichs stärker fragmentierter Konfiguration, während Kopenhagen und Stockholm jeweils eigenständige Zwischenpositionen einnehmen. Das Zusammenspiel formaler und informaler institutioneller Dimensionen sowie die unterschätzte Rolle von Intermediärsorganisationen bestimmen maßgeblich, ob Regionen Unternehmertum und Innovation auf Nachhaltigkeitsziele ausrichten können. Wir leiten daraus Implikationen für eine ortsbezogene Innovationspolitik ab. |
| Keywords: | Institutional Openness, Institutional Theory, Sustainable Entrepreneurship, Sustainable Regional Development |
| JEL: | O31 O32 R11 R58 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifhwps:342483 |
| By: | Gustavo de Souza; Andrew J. Fieldhouse; Karel Mertens; Ishan Nath; Valerie A. Ramey |
| Abstract: | This paper provides the first causal estimates of the global social returns to U.S. public R&D. We use a narrative identification strategy to quantify the effects of exogenous shocks to U.S. R&D appropriations on the dynamic TFP response of 69 foreign economies from 1980–2019. A U.S. R&D appropriations shock equal to 1 percent of the federal R&D capital stock raises foreign TFP by approximately 1 percent after 12 years. This response is driven primarily by nondefense rather than defense R&D and is concentrated in non-OECD economies. These patterns are most consistent with diffusion occurring through openly accessible scientific content, capital-embodied trade and technological leapfrogging by economies further from the global frontier. A back-of-the-envelope calculation suggests that the global social returns to U.S. public nondefense R&D are roughly twice as large as the domestic returns, meaning the U.S. captures about half of these productivity benefits. |
| Keywords: | Public R&D; International R&D Spillovers; Social Returns to R&D; Productivity; Technological Diffusion |
| JEL: | E62 F62 O33 O38 O47 |
| Date: | 2026–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:103620 |
| By: | Nathan Lane |
| Abstract: | Major economies are rearming, and rearmament is itself industrial policy. I ask whether defense promotion—especially innovation policy—can drive industrial development beyond the defense sector. I synthesize evidence on supply-side instruments (including R&D tax credits and grants) and demand-side procurement, tracing each from its effects on firms' own R&D investment through innovation and productivity outcomes to spillovers beyond the recipient firm. The evidence is conditionally positive: public support more often crowds private effort in than out, but returns concentrate among particular firms, technologies, and designs, and weaken as one moves from investment to outputs and from civilian to defense settings. Defense spillovers, in particular, cannot be assumed. I draw five lessons for designing defense industrial policy that delivers broader economic returns, with the greatest weight on Europe's rearmament. The developmental promise of defense promotion is real but conditional: whether rearmament also strengthens the wider industrial economy turns on how it is designed. |
| Keywords: | defense economics, industrial policy, innovation policy, R&D, procurement, EU, defence |
| Date: | 2026–08–12 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2208 |
| By: | Zheng Tian; Luyi Han; Timothy Wojan; Stephan J. Goetz |
| Abstract: | Place-based policy is premised on the idea that productive investments that address endowment deficiencies may release latent comparative advantages, stimulating growth while reducing regional disparities. Extending place-based policy to the domain of innovation is conceptually challenging given conventional wisdom that settlement size is the principal determinant of agglomeration economies that fuels innovation. However, growing concern that more places are being left behind by the innovation economy has prompted greater interest in ways to expand the geography of innovation. Using confidential firm-level data from the 2018 Annual Business Survey, this study examines differences in self-reported innovation activity between firms in rural and urban counties to identify possible endowment deficiencies. We do this by employing the Oaxaca-Blinder decomposition method to quantify the urban-rural innovation gap to better understand the relative contributions of firm characteristics, owner characteristics, and county-level factors. |
| Keywords: | Place-based innovation policy, Rural–urban innovation gap, Oaxaca–Blinder decomposition, Annual Business Survey |
| JEL: | O31 R11 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-48 |
| By: | Dieter F. Kogler; Keungoui Kim |
| Abstract: | Evolutionary Economic Geography (EEG) has become a central perspective within contemporary Economic Geography by explaining how regions, cities, industries, firms, technologies, and institutions evolve over historical time. This chapter introduces EEG’s intellectual foundations in evolutionary economics, Schumpeterian ideas of innovation and creative destruction, and geographical debates on uneven development, path dependence, and regional transformation. It reviews the field’s core conceptual contributions around history, novelty, complexity, emergence, and adaptability, and shows how these ideas have informed empirical research on related variety, regional branching, technological knowledge spaces, networks, resilience, path development, institutions, and policy. The chapter argues that EEG is best understood not as a closed paradigm, but as an evolving and plural research programme. Its future relevance depends on explaining not only how inherited capabilities shape regional trajectories, but also how capabilities, relatedness, and path dependence are produced, activated, selected, contested, and transformed. In doing so, EEG offers a powerful framework for understanding how economic landscapes inherit the past, generate novelty, and confront uncertain spatial, technological, social, and ecological futures. |
| Keywords: | Evolutionary Economic Geography; Regional Diversification; Path Dependence; Knowledge Spaces; Uneven Development |
| JEL: | R11 O33 O18 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2619 |
| By: | Devereux, Michael; Lockwood, Ben; Yerushalmi, Erez |
| Abstract: | We analyze the relative desirability of R&D tax credits (TCs) and patent boxes (PBs) as instruments for stimulating R&D, in a setting which allows for several organizational forms within the R&D sector and where there are several market failures, all of which imply under-investment in R&D. There are two key features of the model. The first is that it is a closed economy, so the (international) profit shifting role for the PB is absent. The second is that there may be an unobservable input to R&D (e.g. managerial effort) that cannot be subsidized by a TC. The government can choose a TC, a PB, and also the main rate of CIT. We find that (i) when the unobservable input is absent, a PB should never be used, but a TC may be, if market failure is severe enough; (ii) when the unobservable input is present, the optimal policy depends on the need for tax revenue, as measured by the MCPF. When this is low, the TC should never be used, but a PB may be, but as need rises, both instruments should be used, and when it is very high, |
| Keywords: | R&D tax credits; patent boxes; corporate income tax; innovation policy; R&D spillovers; tax incentives |
| Date: | 2026–08–17 |
| URL: | https://d.repec.org/n?u=RePEc:akf:cafewp:43 |
| By: | Grega Smrkolj (Newcastle University); Florian Wagener (University of Amsterdam) |
| Abstract: | We study a continuous-time duopoly model of process innovation with R&D spillovers, comparing noncooperative R&D with cooperative research regimes. We extend the standard constant-spillover framework by allowing knowledge transmission to decay with technological distance and to favor followers over leaders in asymmetric specifications. In a global Markov-perfect model, firms may invest before production is viable, enter or exit production as costs evolve, and converge to no-market, monopoly, or duopoly outcomes. State-dependent spillovers change R&D incentives, catch-up dynamics, long-run market structure, and the welfare effects of research cooperation. In the computed equilibria, more follower-favoring spillovers weaken the leader's private incentive to invest but accelerate catch-up, shorten monopoly phases, and make eventual duopoly more likely. When spillovers are weak, cooperation mainly softens dynamic rivalry; when information sharing is substantial, cooperation expands market formation, lowers long-run costs, and can raise both consumer and total surplus, especially under the research-joint-venture regime. The value of R&D cooperation depends on the direction and persistence of knowledge flows, not only on their average intensity. |
| JEL: | C73 D43 O31 |
| Date: | 2026–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260041 |
| By: | Jantos, Louisa; Bizer, Kilian |
| Abstract: | Regional innovation systems (RIS) and challenge-oriented regional innovation systems (CORIS) represent competing ideal types along a continuum from market-driven to sustainability-oriented innovation governance. Yet how these ideal types manifest empirically, and what forms of system-level agency emerge across this continuum, remains largely unexamined. Drawing on 47 semi-structured expert interviews in Zurich and Helsinki - two European innovation leaders selected through a most different systems design - and analysed through an inductive-deductive thematic coding approach, this paper shows that neither case conforms neatly to either ideal type. Both cities occupy intermediate positions on the RIS-CORIS continuum, with Zurich exhibiting a market-driven logic in which sustainability is contingent on economic viability, and Helsinki a challenge-oriented configuration in which economic development remains a constitutive co-goal. System-level agency operates through fundamentally different mechanisms in each case: resource mobilization through contractual arrangements in Zurich, and the active construction of institutional rationales in Helsinki. Despite these differences, both cases achieve comparable levels of regional innovation capacity - a finding consistent with equifinality across the continuum. Two shared structural limitations are identified: a persistent science-policy translation gap and multi-scalar governance dependencies that constrain regional actors regardless of system orientation. These findings advance the empirical understanding of hybrid RIS configurations and carry direct implications for regions seeking to reconfigure their innovation systems towards challenge orientation. |
| Abstract: | Regionale Innovationssysteme (RIS) und herausforderungsorientierte regionale Innovationssysteme (CORIS) bilden zwei konkurrierende Idealtypen. Sie spannen ein Kontinuum zwischen marktgetriebenem und nachhaltigkeitsorientiertem Innovationsmanagement auf. Wie diese Idealtypen empirisch auftreten und welche systemische Handlungsfähigkeit dabei entsteht, ist bislang kaum untersucht. Die Studie basiert auf 47 halbstrukturierten Experteninterviews in Zürich und Helsinki. Beide Städte wurden als europäische Innovationsführer mit möglichst unterschiedlichen Systemdesigns ausgewählt. Die Analyse erfolgte mittels eines induktiv-deduktiven Kodierungsansatzes. Ergebnis: Keine der beiden Städte entspricht einem der Idealtypen eindeutig. Beide nehmen Zwischenpositionen ein. Zürich folgt einer marktgetriebenen Logik, in der Nachhaltigkeit von wirtschaftlicher Tragfähigkeit abhängt. Helsinki zeigt eine herausforderungsorientierte Konfiguration, in der wirtschaftliche Entwicklung ein konstitutives Nebenziel bleibt. Systemische Handlungsfähigkeit funktioniert in beiden Fällen unterschiedlich. Zürich setzt auf Ressourcenmobilisierung durch vertragliche Vereinbarungen. Helsinki konstruiert aktiv institutionelle Begründungsrahmen. Dennoch erreichen beide Städte ein vergleichbares Niveau regionaler Innovationskapazität - ein Hinweis auf Äquifinalität entlang des Kontinuums. Zwei strukturelle Einschränkungen treten in beiden Fällen auf: eine anhaltende Lücke zwischen Wissenschaft und Politik sowie mehrskalige Governance-Abhängigkeiten. Beide begrenzen regionale Akteure unabhängig von ihrer Systemausrichtung. Die Befunde haben direkte Implikationen für Regionen, die ihre Innovationssysteme in Richtung Herausforderungsorientierung umgestalten möchten. |
| Keywords: | Regional Innovation System, Challenge-Oriented Innovation System, System-Level Agency, Innovation, Sustainability |
| JEL: | O31 R58 R11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifhwps:342484 |
| By: | Hamid Bekamiri (Aalborg University Business School, The IKE Research Group, Aalborg University, Denmark); Jan Auernhammer (Center for Design Research, ME Design Group, Stanford University, USA); Milad Abbasiharofteh (Aalborg University Business School, The IKE Research Group, Aalborg University, Denmark); Jesper Lindgaard Christensen (Aalborg University Business School, The IKE Research Group, Aalborg University, Denmark) |
| Abstract: | Green-patent indicators based on Cooperative Patent Classification Y02 tags increasingly inform research, industrial policy, and climate-oriented investment, yet their construct validity has not been evaluated at corpus scale. We ask whether Y02 classification errors are random measurement noise or systematic, direction-specific bias. We introduce an Error-as-Signal framework in which disagreement between an administrative label and an independent model is treated as evidence of potential measurement error. Screening 9, 075, 421 USPTO granted patents from 1962-2024 with a fine-tuned domain model identifies 517, 772 disagreements. Two independent open-weight large language models then assess whether each flagged invention has a direct climate-mitigation or adaptation function. Cross-model consensus identifies 180, 384 administrative Type I errors (False Green) and 29, 465 Type II errors (Silent Green). Correcting these errors reduces the measured green-patent population by 25.5%, from 592, 387 to 441, 468 patents. Misclassification is systematic rather than random. Atypicality predicts Silent Green in an inverted-U pattern, while reflection complexity independently increases under-recognition: controlling for atypicality and filing year, a one-standard-deviation increase is associated with 1.61 times the odds of Silent Green. Structural complexity has the opposite association. Among consensus-attributed errors, the same increase in reflection complexity is associated with 2.45 times the odds that an error is Silent Green rather than False Green. Event tests show no discrete rise in misclassification when green classification became more salient and only limited evidence of increased explicit green framing after the 2013 CPC launch. The evidence is more consistent with bounded classification capacity than with applicant gaming. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.23420 |
| By: | Oded Galor |
| Abstract: | The Royal Swedish Academy of Sciences awarded the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Philippe Aghion, Peter Howitt, and Joel Mokyr "for having explained innovation-driven economic growth". This paper examines their contributions in the context of the development process as a whole. Aghion and Howitt established the centrality of creative destruction in the growth process of advanced economies, identifying the displacement of existing technologies by superseding ones as a key mechanism in sustaining economic growth. Mokyr highlighted the role of a tightening link between theoretical knowledge and practical application during the Scientific Revolution and the Enlightenment in fostering technological progress in Western Europe on the eve of the Industrial Revolution. These frontier-centered perspectives transformed our understanding of the causes and consequences of innovation-driven growth in advanced economies operating near the technological frontier. Yet, throughout much of the development process, the central challenge to growth has depended less on the creation of new technologies than on the emergence of fundamental conditions conducive to skill formation, fertility decline, and societal adaptation, which have shaped the timing of the transition to modern growth, the pace of economic growth thereafter, and the contemporary inequality in the wealth of nations. A comprehensive account of sustained growth and contemporary inequality across societies requires anchoring the growth process in its broader historical arc. |
| Keywords: | Growth, Innovation, Inequality, Unified Growth Theory, Human Capital, Demographic Transition |
| JEL: | O10 O40 Z10 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26173 |