Is innovation in cities a matter of knowledge-intensive services? An empirical investigation

The presence of large cities in a region represents a potential for regional innovation capacity: cities are in fact expected to generate dynamic agglomeration economies and knowledge spillovers. The paper adds to previous analyses on this topic by investigating whether the linkage between the presence of cities in the region and the innovative performance is mediated by the urban industrial structure. In fact, a positive correlation is likely to exist between the presence of large cities in a region and its innovative performance. Such a relationship could also depend on the presence of knowledge-intensive service, rather than on advanced manufacturing activities. In order to verify this statement, we classify European NUTS2 regions both from an industrial perspective, as well as by spatial typologies. We integrate this classification with a novel data set on regional innovation, based on the Community Innovation Survey. On this basis, geographical and descriptive analyses of regional innovation patterns are developed and explained. The descriptive results support our expectations. Regions hosting large urban areas are the most innovative, and this statement is reinforced in regions characterized by specialization in knowledge-intensive services. The simultaneous presence of advanced manufacturing and knowledge-intensive service activities generates synergic effects, fostering innovative performance.