Place dependent effects of lagging regions on regional diversification into key enabling technologies.

Abstract

The purpose of the study is to gain more insight into the path and place dependent nature of technological development. As technological innovations are the main drivers of economic growth, it is important to gain a better understanding on regional differences in the accumulation and development of technological capabilities and what the obstacles are that they need to overcome. In this research I test what the effect is of regional pre-existing knowledge on the accumulation and development of new technological activities and additionally, what the effect is of regional indigenous capabilities on this process. This is done by using data on technologies deemed important by the EC for European regions to invest in; Key enabling technologies. Using millions of European patent applications over a period of 20 years the knowledge bases all regions from 26 EU countries was calculated and its effects studied on the accumulation new specialisations and further technological growth. Lagging European regions were identified through a report by the EC and were used as proxy for underdeveloped regional innovative and productive environments. Results show that developing new KETs follows a path-dependent process. Regions pre-existing knowledge base positively influences the inclusion of new technological activities. Furthermore, these positive relationships are constrained by underdeveloped innovative and productive environments such as those in lagging region. Theoretically, the study adds to regional development literature by adding a large quantitative study using a newly identified technology field (KETs) while also raising questions on what factors contribute to this constrain. Lastly, the results have implications for policy makers, both regional and European.