Knowledge Creation and Diffusion in a Multi-Regional Setting: Conceptual Foundations for an Agent-Based Model

Strong dynamics of innovation in regions are crucial for achieving national and regional economic growth objectives. In this respect, policy recommendations are being sought by European, national as well as regional policymakers. Regional innovation results from the innovative performance of firms, which increasingly have to face global competition, tightened by accelerated technological development and specialization. The necessary new knowledge can no more be created within organizations only, but has increasingly to be sourced through R&D collaborations in flexible networks with partners nearby as well as from anywhere in the world. In this regard, inter-regional networks for the creation of knowledge are gaining importance for regional policy. However, there is little systematic evidence so far in Regional Science on the relationship between localised knowledge creation processes in firms and their embedding in inter-regional R&D collaboration networks.

This Working Paper represents a first step towards closing this research gap by modelling knowledge creation in regions, taking into account firm-level R&D collaborations, inside and outside of the region. We adopt an empirically driven agent-based modelling (ABM) approach to simulate knowledge creation in European regions. In particular, we focus on three main objectives: (i) characterising the influence of inter-regional R&D collaboration on the regional knowledge creation, (ii) disentangling “local buzz” and “global pipelines” as triggers of the regional knowledge creation, and (iii) characterising technological specialization and geographical concentration tendencies (as well as future prospects) among and within European regions.

Our aim is to demonstrate the power of the ABM approach – up to now rarely used in the context of Regional Science – to analyse the interdependencies between R&D networks and the technological performance as well as the collaborative behaviour of firms. Moreover, a novelty of this research is in its extensive use of empirical data for the initialization and the calibration of the ABM, which will enable us to apply the model to real world contexts: In policy experiments the effect of political framework conditions on the regional knowledge creation can be simulated, in order to support the ex-ante evaluation of different public policy measures. Both the theoretical foundation of the model and its empirical foothold will equip the simulation model with a high level of relevance for policymakers at regional, national and European levels.