The paper examines the effects of intra- and inter-regional knowledge spillovers on innovative activities in German states using the augmented Griliches–Jaffe knowledge production function. The “Harris market potential” type index is calculated to proxy for inter-regional knowledge transfers of two types: industrial knowledge transfers generated from the business enterprise sector and academic spillovers generated from universities across all German states. The model also includes the concentration of high-tech enterprises, in order to capture the agglomeration effect in the local economy. The estimation results reveal that not only do local private and university research efforts have a positive and significant effect on local innovative activities, but there are also important inter-regional knowledge spillovers across the German regions.
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