Knowledge Spillovers, Agglomeration Economies, and the Geography of Innovation Activity: A Spatial Econometric Analysis

This paper investigates the extent to which innovative activity in a metropolitan area is affected by knowledge spillovers in the neighboring metropolitan areas as well as in the metropolitan area itself. The spatial econometric analysis shows that innovative activity in a metropolitan area is positively affected by both specialization and diversity externalities in high technology industries in the metropolitan area, and that there also exist geographic knowledge spillovers across metropolitan boundaries. In addition, this study finds that high technology specialization externalities are more localized than high technology diversity externalities.