Innovation Policy

Geography clearly plays a role in facilitating innovation and in furthering new product commercialization. Indeed, our findings suggest that innovation is in itself a geographic process — a function of the knowledge resources that are embodied in the technological infrastructure of specific places. A technological infrastructure provides locational advantage for innovation, promotes technological advance in an industry and may further the economic fortune of regions. This locational advantage, rather than the result of endowments of natural resources, or transportation-cost differentials, or the availability of lower-cost labor, stems from the presence of complementary and mutually reinforcing knowledge resources. Our results indicate that regions with a strong knowledge-based technological infrastructure realize greater numbers of product innovation.1