Recent Research: Can Geography Explain the US-EU Innovation Gap?

What are the main reasons the innovative output of one locale differs from another? If one wanted to explain the differences in patent production between two states, it may be reasonable to look at metrics such as the amount of R&D investments by each state, and the number of employed researchers in the state’s workforce. In other words, one can investigate how inputs to innovation affect the outputs of innovation.



Taking this discussion a step further, what if the physical organization of these inputs within a locale also influences the development of innovation? That the differences in the spatial organization of these inputs, also referred to as the economic geography, can also explain the differences in the generation of innovation is the topic of a recent working paper by Riccardo Crescenzi, Andres Rodriguez-Pose, and Michael Storper.



The Geographical Processes behind Innovation: A Europe-United States Comparative Analysis explores whether or not the "innovation gap" between the U.S. and the European Union (E.U.) can be explained by the differences in their economic geographies. Differences in the intensity of publications, citations, and patent production between the U.S. and E.U., the authors suggest, are indicators of the significant disadvantage of the E.U., and the ever-widening technology gap between them. The gap, they claim, is due in part to the dissimilar historical development of their innovation systems, and structural differences, such as the quality and quantity of R&D resources and the system of higher education. The gap also can be attributed to the spatial distribution of the inputs of innovation, including the mobility of capital, people, and knowledge.



The authors believe because of the ease of mobility in the U.S., the mechanism of the agglomeration of research is different than in Europe, where institutional and cultural barriers throughout the E.U. prevent the maximization of benefits from "external economies and localized interactions.”



By building a model based on patent growth for the metropolitan areas and regions within the U.S. and E.U., they find that the generation of innovation in the U.S. usually occurs in self-contained geographic areas that rely on human capital mobility and localized R&D. In contrast, the process for a region in Europe is more dependent on proximity to other innovative areas and inter-regional knowledge spillovers.



Even though the E.U. has less mobility, less specialized regions, more national institutions, and more diverse cultures than the U.S., Europe may be carving its own unique path, developing functional equivalents to innovation development that are structurally different than in the American system, the paper concludes. Thus, there may be new methods to improve the innovative production of European system that do not require “Americanization” techniques toward bigger and more specialized agglomerations and increased mobility.



The Geographical Processes behind Innovation: A Europe-United States Comparative Analysis can be downloaded at: http://repec.imdea.org/pdf/imdea-wp2007-13.pdf



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