Indirect and feedback effects as measure of knowledge spillovers in French regions

The aim of this article is to provide a precise measure of the role of geographical proximity in the innovation process on the French metropolitan NUTS (Nomenclature of Territorial Units for Statistics) 3 regions over the period 1995 to 2008. We study the relationship between patents applications and internal R&D, and we propose a spatial decomposition coefficient of the independent variables to measure more explicitly the spatial extent of knowledge spillovers (LeSage and Pace, 2009). Our estimation result shows that the internal R&D expenditures have a positive direct and indirect effect on the patents applications, but only for the regions with a strong innovation activity. For these regions, the spillover effect is observed in the first-order neighbourhood, but the spatial lag coefficient is not significant enough to get a positive feedback effect