On the relationship between knowledge creation and economic performance

Abstract

An empirical two-equation dynamic panel-data model system with fixed effects is proposed to analyze the relationship between knowledge creation and economic performance across regions over time. Estimates of the model for Spanish regions show that (i) knowledge creation depends on local R&D effort, on the amount of knowledge in use, and on knowledge creation in neighboring regions; and (ii) assimilation of new knowledge depends on local knowledge creation and on assimilation of knowledge in neighboring regions. Both processes include region-specific context fixed effects and region-specific time effects, representing region-specific dynamic influences. The results imply that (a) efficiency gains at regional level may be achieved by investing locally in the creation of new knowledge, either technological or organizational; (b) creation of knowledge in a region may be promoted by using greater amounts of already existing knowledge, as well as by increasing local R&D effort; (c) both knowledge creation and knowledge assimilation spread to/from neighboring regions; and (d) regional contexts influence both knowledge creation and knowledge assimilation separately.

Keywords:

• economic growth
• panel-data
• R&D
• Spanish regions

Jel Classification::

• O33
• O11
• O32
• C33

Additional information

Luis E. VILA, Doctor in Economics and Business Science, served as a Visiting Scholar to CERAS (Stanford University, USA) and ROA (Maastricht University, the Netherlands). Currently, he works as Teacher and Researcher in the Applied Economics Department at the University of Valencia. Research interest focused on the social and economic effects of educational and cultural investments at individual and social levels. Main publications include papers on the estimation of rates of return to education, the labor market effects of educational and cultural expansions, the wider non-monetary outcomes of education, and the development of professional competencies through university education and later work careers of graduates.

Bernardí CABRER, PhD in Economics, is a Professor in Econometrics at the Department of Economic Analysis, University of Valencia, Spain. He has published several papers in reviews like Environment and Planning A, Research Policy, Journal of Forecasting, Economic System Research, or Economía Aplicada. He has written a book on micro econometrics and decision and his research interests include research policy, innovation performance, time series analysis, regional economics, and input-output studies.

Jose M. PAVÍA, MSc in Mathematics and PhD in Economics and Business Science, is Quantitative Methods Professor in the Economics Faculty of the University of Valencia, Spain. His main research has been published in journals like Journal of the American Statistical Association, Journal of the Royal Statistical Society, International Journal of Forecasting, Environment and Planning A, International Journal of Information Management, European Urban and Regional Studies, or Political Quarterly. His research areas of interest include regional economics, spatial statistics, political decisions, quarterly regional accounts, and time series analysis.