This paper looks at the economic consequences of the research and innovation divide across EU regions and highlights the policy challenge they represent. It reviews the theoretical factors behind current levels of territorial polarisation, maps the current state of this divide and presents an econometric approach to identifying the effects. The core of the argument is that research and development investment alone does not trigger the same returns on investment everywhere because of several factors. These are linked to the cost of technology accessibility in different places, the distance to the technological frontier, positive externalities from larger and denser regions, the quality of local institutions, and hampered knowledge sharing.
By Andrés Rodríguez-Pose (London School of Economics)