Innovation Prone and Innovation Averse Societies: Economic Performance in Europe

Abstract

Although it is commonly accepted that investing in technology and research and development (R&D) is a basic catalyst for the genesis of economic activity, there is less consensus on the spatial significance and returns of the R&D effort for regional and local economies. It is often argued that innovation resulting from allocating local resources to R&D is likely to spill over to other areas, especially in the framework of open national economies. Hence, the incentive to free‐ride increases at the subnational level. This paper shows, however, that in the Western European regional context, regions with higher resources devoted to R&D tend to grow at a greater pace than the remaining spaces. Nevertheless, the passage from R&D to innovation and growth is not achieved in a similar way across Europe. Local social conditions play an important role in the formation of what can be defined as ‘innovation prone’ and ‘innovation averse’ societies. Innovation prone regions are those featured by a weak social filter, which facilitates the transformation of innovation into growth. Conversely, regions burdened by rigid labor markets, shortage of skills, outward migration of able individuals, and an aging of the workforce are less prone to assimilate innovation and to transform it into economic activity. They make up the innovation averse societies in Europe.

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