Geographical clustering and the effectiveness of public innovation programs

Dirk Crass, Christian Rammer and Birgit Aschhoff

No 16-083, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The paper analyzes how geographical clustering of beneficiaries might affect the effectiveness of public innovation support programs. The geographical proximity of firms operating in the same industry or field of technology is expected to facilitate innovation through knowledge spillovers and other localization advantages. Public innovation support programs may leverage these advantages by focusing on firms that operate in a cluster. We investigate this link using data from a large German program that co-funds R&D projects of SMEs in key technology areas called 'Innovative SMEs'. We employ three alternative cluster measures which capture industry, technology and knowledge dimensions of clusters. Regardless of the measure, firms located in a geographical cluster are more likely to participate in the program. Firms being part of a knowledge-based cluster significantly increases their chance of receiving public financial support. We find no effects, however, of geographical clustering on the program's effectiveness in terms of input or output additionality.

Keywords: Innovation; Government Policy; Regional Government Analysis (search for similar items in EconPapers)
JEL-codes: C35 H50 O31 O32 O38 R59 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cse, nep-eur, nep-geo, nep-ino, nep-net, nep-ppm, nep-sbm, nep-tid and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Geographical clustering and the effectiveness of public innovation programs (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:16083

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