Determinants of innovation: the role of the agglomeration economies

Abstract

Innovation is an important driver of productivity and economic growth. ?en, how innovation emerges or how it can be reinforced is a relevant question to tackle, especially in developing economies. ?e main aim of this study is to identify the determinants of innovation with special emphasis on the agglomeration externalities. ?e employed data is obtained from the National Survey of Science, Technology and Innovation Activities (ACTI), corresponding to the periods 2009-2011 and 2012-2014. Using a pooled data of 8,025 firms, discrete choice models are estimated for different choices of firms: general innovation, product, process, organizational and marketing innovation. ?e results show that what matters for innovation is the presence of other innovative firms rather than the concentration of firms in general. ?e agglomeration externalities derived from diversity predominate over those derived from specialization. ?e most relevant individual factors that drive innovation are the investment in R&D and the qualified workers.