The Location of Industrial Innovation: Does Manufacturing Matter?

Isabel Tecu

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: What explains the location of industrial innovation? Economists have traditionally attempted to answer this question by studying firm-external knowledge spillovers. This paper shows that firm-internal linkages between production and R&D play an equally important role. I estimate an R&D location choice model that predicts patents by a firm in a location from R&D productivity and costs. Focusing on large R&D-performing firms in the chemical industry, an average-sized plant raises the firm�s R&D productivity in the metropolitan area by about 2.5 times. The elasticity of R&D productivity with respect to the firm�s production workers is almost as large as the elasticity with respect to total patents in the MSA, while proximity to academic R&D has no significant effect on R&D productivity in this sample. Other manufacturing industries exhibit similar results. My results cast doubt on the frequently-held view that a country can divest itself of manufacturing and specialize in innovation alone.

Pages: 62 pages
Date: 2013-03
New Economics Papers: this item is included in nep-com, nep-cse, nep-cwa, nep-eff, nep-geo, nep-ind, nep-ino, nep-ipr, nep-pr~, nep-knm, nep-sbm and nep-ure
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Citations: View citations in EconPapers (7)

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https://www2.census.gov/ces/wp/2013/CES-WP-13-09.pdf First version, 2013 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:13-09

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