Does local technological innovation lead to local development? A policy perspective

Much recent work on innovation and regions takes as a starting point Marshallian districts, variously updated by concepts such as clusters, regional innovation systems and learning regions. The basic premise is that certain regional dynamics are conducive to innovation. This work has inspired regional development agencies, which regularly implement local innovation policies with the hope of stimulating local economic development. However, we argue in this paper that there is no necessary connection between local innovativeness and local development: indeed, it is quite possible that innovation in region A leads to growth (of employment and income) in region B, particularly if region B is better suited to developing the economic potential of innovations. In this paper the conceptual underpinnings of this argument are developed, and an exploratory empirical analysis undertaken. Using Canadian data (patent applications and census data for 203 urban labour markets) this paper explores whether there is a connection between local applications and local employment and income growth. The results show that there is virtually no connection between local innovation (as measured by local applications) and local development, and that local development is closely connected with access to markets, local industrial structure and wider-scale regional factors.