Production of Knowledge and Geographically Mediated Spillovers from Universities: A Spatial Econometric Perspective and Evidence from Austria

The paper sheds some light on the issue of geographically mediated knowledge
spillovers from university research activities to regional knowledge production in high techindustries in Austria. Knowledge spillovers occur because knowledge created by universityis typically not contained within that institution, and thereby creates value for others.
The conceptual framework for analysing geographic spillovers of university researchon regional knowledge production is derived from Griliches (1979). It is assumed that knowledge production in the high tech sectors essentially depends on two major sources of knowledge: the university research that represents the potential pool of knowledge spillovers and R&D performed by the high tech sectors themselves.
Knowledge is measured in terms of patents, university research and R&D in terms of expenditures. We refine the standard knowledge production function by modelling research spillovers as a spatially discounted external stock of knowledge. This enables us to capture regional and interregional spillovers. Using district -level data and employings patial econometric tools evidence is found of university research spillovers that transcend the geographic scale of the political district in Austria. It is shown that geographic boundedness of the spillovers is linked to a decay effect.