Knowledge and Space in Economic History: Innovations in the German Empire, 1877-1918

Analyzing a new data set of 39,343 high-value patents, the authors find ample evidence that interindustry knowledge spillover between technologically, economically, and geographically related industries were a major source of innovative activities during German industrialization. It is discovered that most of the parallel patent booms of the successive waves of technological progress (railroads, dyes, chemicals, and electrical engineering) occurred in innovative industries that were closely related technologically. The authors then show that these industries were often also geographically clustered. Nearly all German regions that maintained or improved their above-average innovativeness over time had at least one innovative cluster in the fields of mechanical engineering, electrical engineering, or chemicals. The existence and success of these innovative clusters suggest that knowledge spillover between firms of different industries occurred frequently and increased the innovative output of the firms involved