In recent decades, the importance of knowledge spillovers for the processes of innovation and economic growth has been widely recognized. Firms can improve their performance by implementing innovative ideas that were not originally developed in-house.

In this this way, firms and hence economies may grow without having to use additional labour and capital inputs. Although the importance of knowledge spillovers is undisputed, little is known about the size of spillover effects and what type of spillovers is more important for achieving growth: spill-overs emerging within sectors (intra-sectoral spillovers) or spillovers emerging between sectors (inter-sectoral spillovers). Furthermore, the impact of local competition on innovation and growth is not straightforward, as there are both negative effects (relatively less benefits for the innovator due to higher spillovers, possibly resulting in less innovations) and positive effects (more innovations as it is necessary for firms to remain competitive in the market) involved.

These issues are investigated in the present report, by estimating a regional growth model using a dataset of 60 British regions, covering entire Great Britain. Sectoral employment growth at the regional level is in the model explained by specialization, competition, diversity and some control variables. The model is applied separately for the sectors manufacturing, construction, trade & catering, transport & communication, and other services.

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You can order the report 'Knowledge spillovers and employment growth in Great Britain' (price EUR 15,90) through e-mail: info@eim.nl, by fax (+ 31 79 341 50 24) or by phone (+ 31 79 341 36 34), stating the order number N200105. On receipt of your order an invoice will be enclosed. Alternatively, you can download this publication on our Knowledge Website for SMEs and Entrepreneurship (no charge).