Potentials for reducing spatial inequalities in innovation: A spatial econometric perspective

Capabilities of regions to create new knowledge are a major source of regional inequalities in innovation and, thus, economic competitiveness in the long run. Aiming to identify potentials for reducing such inequalities, we analyse the extent to which disparities in regional technological knowledge stocks can be explained by specific characteristics of regional knowledge bases. Specifically, we shift attention to characteristics recently discussed in the context of regional innovation capabilities, among them, indicators capturing the relatedness of the technological fields in which a region is active in, a region’s knowledge complexity, and the technological complementarity of neighbouring regions. We implement a spatial Durbin model for 430 European regions. While high spatial complementarity and relatedness of the region’s technological capacities are conducive to regional innovation, knowledge complexity exhibits a negative indirect effect. In illustrative convergence scenarios, we demonstrate the potential of increasing regional relatedness and complementarity values for reducing inequalities in Europe.