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As a study shows, innovation flows in complex ways across regions and sectors

innovation

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The creation of knowledge – the generation of new ideas and patents – is an important engine for economic growth. Understanding how knowledge moves across industries and regions can inform research and development (R&D) efforts, foster university-industry partnerships for innovation, and influence location decisions by private companies. A new study from the University of Illinois in collaboration with Stockholm University and the Korea Labor Institute offers an in-depth look at the flow of knowledge in five industrial sectors in the United States.

“Our work provides a kind of patent-making recipe with a list of ingredients that varies by industry sector,” says Sandy Dall’erba, a professor in the University of Illinois Department of Agricultural and Consumer Economics (ACE) and director of the Center for Climate , Regional, Environmental and Trade Economics (CREATE) at U of I. Dall’erba is co-author of the study.

“Some sectors are very dependent on local inputs, such as B. the presence of a university, in contrast to more distant elements, such. B. Expenditure on research and development by another private company. In some cases, this type of collaboration is happening between companies that have thousands of locations miles apart, as virtual meetings have increasingly replaced in-person meetings,” says Dall’erba.

“Furthermore, our research measures the extent to which innovation in one sector depends on R&D in the same or in other sectors. For example, new patents in the drug and medical industry depend on local and distant R&D in the chemical industry.”

Traditionally, geographic proximity was considered essential for the flow of knowledge. Clusters such as the high-tech industry in Silicon Valley or the automotive industry in Detroit enable personal interactions and informal networking. Economists now recognize that innovation can be shared across greater distances, but most studies have looked at aggregated results rather than site- and industry-specific patterns.

“We wanted to see the importance of geography in knowledge generation patterns in specific industries. We also wanted to examine how information flows across similar or different industries. Finally, we look at the impact of private and academic research and development activities,” says lead author Orsa Kekezi, a researcher at the Swedish Institute for Social Research at Stockholm University. Kekezi began working on this research while she was a visiting scholar in Illinois.

Researchers analyzed knowledge transfer in 853 US metropolitan areas across five manufacturing industries: chemical, drug and medical, mechanical, computer and communications, and electrical and electronics.

The study uses patent filings as proxies for knowledge creation and traces the flow from patent creation to citation (based on US Patent and Commerce Office data). This measures the direction of innovation and identifies the role of external factors in knowledge output.

The core elements of the analysis are intra- and inter-sector knowledge transfers and intra- and inter-regional knowledge flows, defined as local (within the county), short distance (neighboring counties within 50 miles), and the rest of the US (over 50 km). The researchers also looked at the presence of university and private research and development, as well as other factors such as the number of college graduates and industrial diversity in a county.

“Overall, the local environment is very important for all sectors. The industry structure in the region, the size of the companies, whether there is a university – all these elements are important for innovations. All sectors benefit from the local environment,” says Kekezi.

However, the specifics vary depending on the industry and paint a complex picture of the interactions. There is no one-size-fits-all approach to patent development, and if you look at the average results, you’ll overlook the intricate details and patterns across sectors and regions.

“While university research is important for all sectors, there is also a lot of heterogeneity here,” says study co-author Dongwoo Kang, research fellow at the Korea Labor Institute, South Korea. “For example, it is more important for the chemical industry and the drug and medical industry; these sectors really benefit from basic research.

“Universities provide the core research needed for the chemical industry to function. Unlike perhaps the mechanical or electrical industries, the chemical industry relies more on faculty scientists studying fundamental processes,” he adds.

National broadcasts play less of a role in the chemical industry, so personal contact is important. On the other hand, for the drug and medical industry, both cross-industry and regional spillovers are important over long distances, so geographic proximity is not necessarily required. And for the electrical and electronics industry, short-distance cross-sector contagion effects play an important role.

The study results can help companies with their location decisions.

“The idea that a company appreciates the proximity to a university or where research and development is already taking place is still valid. But we also show that the innovation network is not entirely local,” says Dall’erba.

“The key takeaway from the paper is that we should not only look at local spillovers, but also at knowledge that comes from further afield and from other industries,” notes Kekezi. “New ideas come not only from looking at what has been done in your own field, but also from looking at the bigger picture and how we can combine different types of knowledge to create something new.”

Taking the development of COVID-19 vaccines as an example, Kang adds.

“The US has invested heavily in research and development to spur innovation in developing the first COVID-19 vaccines. This is usually done through a central cluster that serves as the foundation for innovation. But there are also other networks making new COVID-19 vaccines. 19 vaccines. Our results imply that not only local activities but also research and development elsewhere are important to produce new COVID-19 vaccines,” he explains.

The results can also help to improve the design of future local and national innovation policies.

“We need to move away from an approach where everything is driven by similar mechanisms and instead understand much better what really works for one industry can be very different than what works for another industry. It’s not just about promoting industry clusters; it’s more complicated than that. When governments try to encourage innovation, they need to define a strategy that works for a specific industry and location,” says Dall’erba.


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More information:
Orsa Kekezi et al., The Role of Interregional and Intersectoral Knowledge Transfers on Regional Knowledge Creation in US Metropolises, Spatial Economic Analysis (2022). DOI: 10.1080/17421772.2022.2045344

Provided by the University of Illinois at Urbana-Champaign

citation: Innovation flows across regions and sectors in complex ways, study shows (2022, April 4), retrieved on April 5, 2022 from

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https://phys.org/news/2022-04-regions-sectors-complex-ways.html As a study shows, innovation flows in complex ways across regions and sectors

Russell Falcon

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