On The Existence and Extent of Localized Knowledge Spillovers

Abstract

I introduce a new continuous distance measure of knowledge spillover localization that utilizes microgeographic data to account for close-distance, cross-border spillovers. I find that there is significant localization at both an international and intranational level, and moreover that this localization has been increasing over time. The increase in localization is especially strong for industries typically considered to be more modern, such as computing and pharmaceuticals. I also find that, when measured at medium or large distances, the localization of a given technology either decreases slowly or stays constant over the lifespan of the technology, indicating that both state and country borders pose persistent barriers to knowledge spillovers. However, at small distances, localization can actually increase over the lifespan of a technology.