Potentials for Reducing Spatial Inequalities in Innovation: A Spatial Econometric Perspective

ABSTRACT This study explains disparities in regional innovation through specific features of regional knowledge bases, including recently discussed concepts such as, technological relatedness, knowledge complexity, and technological complementarity among neighboring regions and regions connected in R&D networks. We employ a spatial autoregressive panel model for 405 European regions to estimate the effects of these characteristics. While being connected to complementary regions and having a high region‐internal technological relatedness are conducive to regional innovation, knowledge complexity has no positive effect interestingly. In illustrative convergence scenarios, we demonstrate the potential of increasing relatedness and complementarity to reduce inequalities in Europe, pointing to important policy implications.