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The effects of public research and subsidies on regional structural strength

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Abstract

The paper analyzes the effects of public research (publications) and research and education subsidies on regional structural strength. To this end it takes new approaches in two respects: First, we use a vector auto-regressive (VAR) model to detect reciprocal effects. Second, we introduce a new measure for structural strength based on the regions’ industrial composition. We find that the effects of public research and public subsidies differ depending on the location’s innovativeness. Both scientific activity and public subsidies are found to have positive effects on regional structural strength in less innovative and economically weak regions, but low or even negative effects in economically strong regions.

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Notes

  1. We use the term “quality” here to denote whether an industry contributes more or less to the structural situation in a region. We assume that faster growing, more innovative and more knowledge-intensive industries have more positive contributions, on average, than less innovative and less knowledge-intensive industries.

  2. The number of municipalities is set to 380. This is done because in some robustness checks we divided the sample in three groups so that the analyses are conducted with about 388 municipalities and we intended to use the same number for all confidence interval calculations. The municipalities are drawn by sampling with replacement.

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Acknoledgements

The authors would like to thank two anonymous referees for their helpful comments. This research was funded by the German Federal Ministry of Education and Research (grant number: 01HI16004P).

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  1. Philipps-Universität Marburg, Deutschhausstr. 10, 35032, Marburg, Germany

    Thomas Brenner & Franziska Pudelko

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Brenner, T., Pudelko, F. The effects of public research and subsidies on regional structural strength. J Evol Econ 29, 1433–1458 (2019). https://doi.org/10.1007/s00191-019-00626-x

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