The innovative impact of public research institutes: evidence from Italy

Robbiano, Simone (2021): The innovative impact of public research institutes: evidence from Italy.

Abstract

This paper leverages on the establishment of Italian Institute of Technology (IIT) as a policy change useful to understand the causal effect of public funded research centres on the regional innovative capacity. By relying on the Synthetic Control Method (SCM) approach and Italian NUTS-3 panel data, empirical results suggest that the establishment of IIT has positively impacted on regional innovation and high-skilled human-capital, as well as on regional growth. The paper also provides evidence of knowledge spillovers from IIT within the hosting region. Finally, these results are robust to a variety of placebo permutation tests as well as several sensitivity checks, or when considering a Difference-in-Differences (DiD) approach.

• Item Type: MPRA Paper
• Language: English
• Keywords: Public Research Institutes, Regional Development, Regional Innovation, Regional Human Capital, Knowledge Spillovers, Synthetic Control Method
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I23 - Higher Education ; Research Institutions; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R10 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R5 - Regional Government Analysis > R58 - Regional Development Planning and Policy

References

Abadie, A., Diamond, A. & Hainmueller, J. (2010), ‘Synthetic control methods for comparative case studies: Estimating the effect of california’s tobacco control program’, Journal of the American statistical Association 105(490), 493–505.

Abadie, A., Diamond, A. & Hainmueller, J. (2015), ‘Comparative politics and the synthetic control method’, American Journal of Political Science 59(2), 495–510.

Abadie, A. & Gardeazabal, J. (2003), ‘The economic costs of conflict: A case study of the basque country’, American economic review 93(1), 113–132.

Abramovsky, L. & Simpson, H. (2011), ‘Geographic proximity and firm–university innovation linkages: evidence from great britain’, Journal of economic geography 11(6), 949–977.

Acemoglu, D. & Linn, J. (2004), ‘Market size in innovation: theory and evidence from the pharmaceutical industry’, The Quarterly journal of economics 119(3), 1049–1090.

Adams, J. D. (1990), ‘Fundamental stocks of knowledge and productivity growth’, Journal of political economy 98(4), 673–702.

Aghion, P., Boustan, L., Hoxby, C. & Vandenbussche, J. (2009), ‘The causal impact of education on economic growth: evidence from us’, Brookings papers on economic activity 1, 1–73.

Aghion, P. & Howitt, P. (1990), A model of growth through creative destruction, Technical report, National Bureau of Economic Research.

Aghion, P. & Howitt, P. (2005), ‘Growth with quality-improving innovations: an integrated framework’, Handbook of economic growth 1, 67–110.

Agrawal, A., Galasso, A. & Oettl, A. (2017), ‘Roads and innovation’, Review of Economics and Statistics 99(3), 417–434.

Amin, A. & Wilkinson, F. (1999), ‘Learning, proximity and industrial performance: an introduction’, Cambridge Journal of Economics 23(2), 121–125.

Audretsch, D. B. & Feldman, M. P. (1996), ‘R&d spillovers and the geography of innovation and production’, The American economic review 86(3), 630–640.

Autor, D. H. (2003), ‘Outsourcing at will: The contribution of unjust dismissal doctrine to the growth of employment outsourcing’, Journal of labor economics 21(1), 1–42.

Azoulay, P., Graff Zivin, J. S., Li, D. & Sampat, B. N. (2019), ‘Public r&d investments and private-sector patenting: evidence from nih funding rules’, The Review of economic studies 86(1), 117–152.

Baldwin, R. E. & Martin, P. (2004), Agglomeration and regional growth, in ‘Handbook of regional and urban economics’, Vol. 4, Elsevier, pp. 2671–2711.

Bankitalia (2016), ‘100 genova. centenario di palazzo de gaetani sede di genova della banca d’italia’, https://www.bancaditalia.it/chi-siamo/beni-immobili/edifici-storici/palazzo-degaetani/ centenario_palazzo_de_gaetani_genova.pdf.

Baptista, R. (1998), ‘Clusters, innovation and growth: a survey of the literature’, The dynamics of industrial clusters: international comparisons in computing and biotechnology pp. 13–51.

Barro, R. & Sala-i Martin, X. (2004), ‘Economic growth second edition’.

Beise, M. & Stahl, H. (1999), ‘Public research and industrial innovations in germany’, Research policy 28(4), 397–422.

Bennett, R. J., Bratton, W. A. & Robson, P. J. A. (2000), ‘Business advice: the influence of distance’, Regional Studies 34(9), 813–828.

Benoliel, D. & Gishboliner, M. (2014), ‘The effect of economic crises on patenting activity across countries’, Chi.-Kent J. Intell. Prop. 14, 316.

Black, D. & Henderson, V. (1999), ‘A theory of urban growth’, Journal of political economy 107(2), 252– 284.

Bonander, C., Jakobsson, N., Podestà, F. & Svensson, M. (2016), ‘Universities as engines for regional growth? using the synthetic control method to analyze the effects of research universities’, Regional Science and Urban Economics 60, 198–207.

Bottasso, A., Conti, M., Robbiano, S. & Santagata, M. (2020), Roads to innovation: evidence from italy, Technical report, University Library of Munich, Germany.

Bronzini, R., Mocetti, S. & Mongardini, M. (2020), ‘The economic effects of big events: evidence from the great jubilee 2000 in rome’, Journal of Regional Science .

Bronzini, R. & Piselli, P. (2016), ‘The impact of r&d subsidies on firm innovation’, Research Policy 45(2), 442–457.

Cantoni, D. & Yuchtman, N. (2014), ‘Medieval universities, legal institutions, and the commercial revolution’, The Quarterly Journal of Economics 129(2), 823–887.

Carlino, G. A., Carr, J., Hunt, R. M., Smith, T. E. et al. (2012), The agglomeration of r & d labs, Technical report, Federal Reserve Bank of Philadelphia.

Cohen, W. M. & Levinthal, D. A. (1990), ‘Absorptive capacity: A new perspective on learning and innovation’, Administrative science quarterly pp. 128–152.

Conley, T. G. & Taber, C. R. (2011), ‘Inference with “difference in differences” with a small number of policy changes’, The Review of Economics and Statistics 93(1), 113–125.

Cowan, R. & Zinovyeva, N. (2013), ‘University effects on regional innovation’, Research Policy 42(3), 788–800.

Drucker, J. & Goldstein, H. (2007), ‘Assessing the regional economic development impacts of universities: A review of current approaches’, International regional science review 30(1), 20–46.

Duranton, G., Henderson, V. & Strange, W. (2015), Handbook of regional and urban economics, Elsevier.

Eurostat, E. (2013), ‘European system of accounts esa 2010’, Official Journal of the European Union 174, 56.

Feldman, M. P. (1999), ‘The new economics of innovation, spillovers and agglomeration: Areview of empirical studies’, Economics of innovation and new technology 8(1-2), 5–25.

Fisher, R., Polt, W., Vonortas, N. S. & Bach, L. (2009), The impact of publicly funded research on innovation: An analysis of European Framework Programmes for Research and Development, Office for Official Publications of the European Communities.

Fujita, M. & Thisse, J.-F. (1996), ‘Economics of agglomeration’, Journal of the Japanese and international economies 10(4), 339–378.

Fujita, M. & Thisse, J.-F. (2002), ‘Agglomeration and market interaction’, CEPR Discussion Paper 3362 .

Fujita, M. & Thisse, J.-F. (2003), ‘Does geographical agglomeration foster economic growth? and who gains and loses from it?’, The Japanese Economic Review 54(2), 121–145.

Goldstein, H. A., Maier, G. & Luger, M. (1995), ‘The university as an instrument for economic and business development: Us and european comparisons’, Emerging patterns of social demand and university reform: Through a glass darkly pp. 105–133.

Greenstone, M., Hornbeck, R. & Moretti, E. (2010), ‘Identifying agglomeration spillovers: Evidence from winners and losers of large plant openings’, Journal of Political Economy 118(3), 536–598.

Griliches, Z. (1992), ‘The search for r&d spillovers’, The Scandinavian Journal of Economics pp. S29– S47.

Grossman, G. M. & Helpman, E. (1993), Innovation and growth in the global economy, MIT press.

Harhoff, D. (2000), Are there financing constraints for r&d and investment in german manufacturing firms?, in ‘The economics and econometrics of innovation’, Springer, pp. 399–434.

Hausman, N. (2012), ‘University innovation, local economic growth, and entrepreneurship’, US Census Bureau Center for Economic Studies Paper No. CES-WP-12-10 .

Heckman, J. J. & Hotz, V. J. (1989), ‘Choosing among alternative nonexperimental methods for estimating the impact of social programs: The case of manpower training’, Journal of the American statistical Association 84(408), 862–874.

Hervas-Oliver, J.-L. & Albors-Garrigos, J. (2009), ‘The role of the firm’s internal and relational capabilities in clusters: when distance and embeddedness are not enough to explain innovation’, Journal of Economic Geography 9(2), 263–283.

Izushi, H. (2003), ‘Impact of the length of relationships upon the use of research institutes by smes’, Research policy 32(5), 771–788.

Jaffe, A. B. (1989), ‘Real effects of academic research’, The American economic review pp. 957–970.

Jaffe, A. B., Trajtenberg, M. & Henderson, R. (1993), ‘Geographic localization of knowledge spillovers as evidenced by patent citations’, the Quarterly journal of Economics 108(3), 577–598.

Jones, C. I. (2005), Growth and ideas, in ‘Handbook of economic growth’, Vol. 1, Elsevier, pp. 1063– 1111.

Kantor, S. & Whalley, A. (2014), ‘Knowledge spillovers from research universities: evidence from endowment value shocks’, Review of Economics and Statistics 96(1), 171–188.

King, G. & Zeng, L. (2006), ‘The dangers of extreme counterfactuals’, Political Analysis 14(2), 131–159.

Kreif, N., Grieve, R., Hangartner, D., Turner, A. J., Nikolova, S. & Sutton, M. (2016), ‘Examination of the synthetic control method for evaluating health policies with multiple treated units’, Health economics 25(12), 1514–1528.

Lane, P. J. & Lubatkin, M. (1998), ‘Relative absorptive capacity and interorganizational learning’, Strategic management journal 19(5), 461–477.

Lane, P. J., Salk, J. E. & Lyles, M. A. (2001), ‘Absorptive capacity, learning, and performance in international joint ventures’, Strategic management journal 22(12), 1139–1161.

Liu, S. (2015), ‘Spillovers from universities: Evidence from the land-grant program’, Journal of Urban Economics 87, 25–41.

Love, J. H. & Roper, S. (2001), ‘Outsourcing in the innovation process: locational and strategic determinants’, Papers in Regional Science 80(3), 317–336.

Mansfield, E. & Lee, J.-Y. (1996), ‘The modern university: contributor to industrial innovation and recipient of industrial r&d support’, Research policy 25(7), 1047–1058.

Minerva, G. A. & Ottaviano, G. I. (2009), ‘Endogenous growth theories: Agglomeration benefits and transportation costs’, Handbook of Regional Growth and Development Theories. Edward Elgar, Cheltenham .

Moretti, E. (2004a), ‘Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data’, Journal of econometrics 121(1-2), 175–212.

Moretti, E. (2004b), ‘Workers’ education, spillovers, and productivity: evidence from plant-level production functions’, American Economic Review 94(3), 656–690.

Moretti, E., Steinwender, C. & Van Reenen, J. (2019), The intellectual spoils of war? defense r&d, productivity and international spillovers, Technical report, National Bureau of Economic Research.

Nelson, R. R. (1993), National innovation systems: a comparative analysis, Oxford University Press on Demand.

Neumark, D. & Simpson, H. (2015), Place-based policies, in ‘Handbook of regional and urban economics’, Vol. 5, Elsevier, pp. 1197–1287.

OECD (2013), OECD Compendium of Productivity Indicators 2013, OECD Publishing.

Pakes, A. & Griliches, Z. (1980), ‘Patents and r&d at the firm level: A first report’, Economics letters 5(4), 377–381.

Polanyi, M. (2009), The tacit dimension, University of Chicago press.

Romer, P. M. (1990), ‘Endogenous technological change’, Journal of political Economy 98(5, Part 2), S71–S102.

Rosenberg, N. & Landau, R. (1986), The Positive sum strategy: harnessing technology for economic growth, National Academies Press.

Rubin, D. B. (2005), ‘Causal inference using potential outcomes: Design, modeling, decisions’, Journal of the American Statistical Association 100(469), 322–331.

Smith, K. (2005), ‘Measuring innovation’.

Toole, A. A. (2012), ‘The impact of public basic research on industrial innovation: Evidence from the pharmaceutical industry’, Research Policy 41(1), 1–12.

Torre, A. & Gilly, J. (2000), ‘Debates and surveys: On the analytical dimension of proximity dynamics” regional studies; apr 2000; 34, 2’, Academic Research Library pg 169.

Valero, A. & Van Reenen, J. (2019), ‘The economic impact of universities: Evidence from across the globe’, Economics of Education Review 68, 53–67.

Waldinger, F. (2016), ‘Bombs, brains, and science: The role of human and physical capital for the creation of scientific knowledge’, Review of Economics and Statistics 98(5), 811–831.

Zuniga, P., Guellec, D., Dernis, H., Khan, M., Okazaki, T. & Webb, C. (2009), ‘Oecd patent statistics manual’, Francia: OECD Publications .