The geography of knowledge spillovers in Europe

In recent years, economic growth theorists have focused new attention on the role of knowledge capital in aggregate economic growth, with a prominent modelling role for knowledge spillovers (see, Romer 1986; Grossman and Helpman 2001; and Fischer 2009). For the purpose of this chapter, knowledge spillovers may be defined to denote the benefits of knowledge to firms not responsible for the original investment in the creation of this knowledge. It is convenient to distinguish two types of knowledge spillovers: spillovers embodied in traded capital or intermediate goods and services (so-called pecuniary externalities), and knowledge spillovers of the disembodied kind. The focus in this chapter is on disembodied knowledge spillovers which arise because knowledge is a partially excludable and non-rivalrous good