Do Local Knowledge Spillovers Matter for Development? An Empirical Study of Uruguay’s Software Cluster

Published on Oct 1, 2008in World Development3.90
· DOI :10.1016/j.worlddev.2008.01.003
Effie Kesidou9
Estimated H-index: 9
(University of Nottingham),
Ha Henny Romijn26
Estimated H-index: 26
(TU/e: Eindhoven University of Technology)
Summary In economically advanced countries, local knowledge spillovers (LKS) between agglomerated firms are seen as major drivers of regional innovation and growth. In contrast, innovation research focusing on developing countries has emphasized international linkages, and has largely neglected LKS. This paper assesses the importance of LKS for innovation of clustered firms in a developing-country setting. An econometric analysis with new survey data from software firms in Montevideo, Uruguay, shows that LKS have a significantly positive impact on firms' innovation performance through labor mobility, company spin-offs, and informal interactions among actors. LKS are also shown to be highly important relative to other sources of knowledge.
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