The effects of public research and subsidies on regional structural strength

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.

Classification of regions according to the dominant innovation barriers: The characteristics and stability of region types in Germany

“…where w ij is the used weights, d ij denotes the driving time from municipality i to municipality j (based on the street map from the year 2012), and r and s are parameters determining the exact shape of the decay function (Brenner, 2017), which are set to r = 45 min and s = 7 here (as used and discussed in Brenner & Pudelko, 2019). The value for each labor market area is calculated as the weighted average of the spDENS i of all contained municipalities weighted by the number of their inhabitants.…”

“…Therefore, we use the spatially weighted average of the population density ( spDENS ). For each municipality i , a weighted average of the population density of all surrounding municipalities is calculated using the following distance decay function (see Brenner, 2017): where w ij is the used weights, d ij denotes the driving time from municipality i to municipality j (based on the street map from the year 2012), and r and s are parameters determining the exact shape of the decay function (Brenner, 2017), which are set to r = 45 min and s = 7 here (as used and discussed in Brenner & Pudelko, 2019). The value for each labor market area is calculated as the weighted average of the spDENS i of all contained municipalities weighted by the number of their inhabitants.…”

“…Second, besides having a low overall economic activity, lagging regions also have a disadvantageous industry structure. We use the measure of structural strength developed by Brenner and Pudelko (2019). This measure assigns a value to each industry on the basis of its employment dynamics, qualification, and innovativeness and calculates its weighted average for each region on the basis of the industries’ shares in the region ( STRUCT ).…”

“…Some studies show a correlation between regional structural weakness or economic growth and low innovation activity (Fritsch & Mueller, 2004; Koschatzky, 2018). A high level of innovation activity is one way of improving the economic structure of a region and achieving a more dynamic economy (Brenner & Pudelko, 2019; Ulrich et al, 2007). Therefore, the fostering of innovation activity can and should be a significant component of regional policy and structural support, although not the only one.…”

Policy options for lagging regions—effects, new approaches and emerging challenges: introduction to the special issue

“…Heterogeneous effects are also likely in other policy fields that tend to affect regional disparities such as innovation policy or fiscal equalization schemes, but empirical evidence on this issue is still scarce (Brenner and Pudelko 2019;Wardenburg and Brenner 2020). Therefore, further investigations of how the effects of policies differ across regions depending on the factors targeted by the policy measures might provide important information for the design of these measures.…”