Knowledge Creation, Knowledge Diffusion and Regional Growth

Abstract

There seems to be unanimity among economists that new knowledge is one of the most important sources of economic growth. The spatial dimension of knowledge, however, is often neglected. Obviously, the costs of information transfer over large distances have been rapidly decreasing during the last decades. So, at first glance, in the age of internet, fax and e-mail spatial aspects may seem of ever decreasing influence. This is, however, not the whole story: Recent empirical studies have shown that knowledge spillovers are geographically localized (e.g., Glaeser et al. 1992; Jaffe et al. 1993; Audretsch, Feldman 1996; Keller 2000). This may be due to the fact that new knowlege is often unstructured and highly complex (tacit knowledge) and can thus best be transferred face to face (Polanyi 1958). Furthermore, new knowledge is often produced cooperatively in joint ventures or innovation networks. In these cases, the advantage of spatial proximity is not so much the reduction of information costs but the fact that only close personal relationships allow for the evolution of incentive and sanction mechanisms necessary for the keeping of the implicit cooperation contracts (Bröcker 1995).