Regions continuously undergo structural change. New activities emerge and grow, while old activities shrink or vanish. The ability to diversify into new fields crucially matters for regions’ economic growth and resilience. Previous research shows ample evidence that regional diversification is strongly path dependent, as regions are more likely to diversify into related than unrelated activities. In their new paper, Lars Mewes and Tom Broekel ask whether contemporary innovation policy in form of R&D subsidies intervenes in the process of regional diversification. In their study, they focus on R&D subsidies and assess whether subsidies cement existing path dependent developments, or whether they help in breaking these by facilitating unrelated diversification. The results of their study suggest that R&D subsidies positively influence regional technological diversification. In addition, they find significant differences between types of subsidy. Subsidized joint R&D projects have a larger effect on the entry probabilities of technologies than subsidized R&D projects conducted by single organizations. To some extent, collaborative R&D can even compensate for missing relatedness by facilitating diversification into unrelated technologies.
Mewes, L.; Broekel, T. (2020): Subsidized to change? The impact of R&D policy on regional technological diversification. The Annals of Regional Science. DOI: 10.1007/s00168-020-00981-9
