Does Agglomeration Boost Innovation? An Econometric Evaluation

Innovation is crucial to regional economic competitiveness and to productivity growth. A salient feature of the Indian economy is the geographic clustering of both economic activity and innovation. In this paper, I study to what extent the spatial distribution of economic activity drives innovation. I analyse patent applications between 1999 and 2007 across districts in India and my econometric findings suggest that R&D expenditures, industrial diversity and the distribution of human capital endowments can have an important effect on generating innovation. The estimates are robust to omitted variables bias, to different model specifications and to the type of applicant.