Chapter 4 Imports and regional development
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In a recent paper, Andersson and Johansson (2008) investigate how certain regional characteristics influence the generation of export innovations. In the empirical part of the paper, the frequency of such innovations is matched against characteristics of regions that reflect (i) their information about export varieties and export markets, (ii) their physical communication opportunities, and (iii) the absorptive capacity of the firms in each region, with significant results for all explanatory variables except one. However, what is missing in this formulation is the critical influence of imports as a source of export innovations. The generation of export innovations implies that two categories of information are combined. One category refers to different customers’ or customer groups’ specific demands concerning product characteristics and their willingness to pay for different combinations of product characteristics. The other refers to existing technical solutions, which can be used for developing products with the demanded combinations of product characteristics. It is the job of the R & D activities to combine these two sources of information. From a regional perspective, it is important to understand that the size of the R & D investments and the frequency of innovations in each functional (urban) region is always a very small fraction of the total volume of R & D activities in the global economy.

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