NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Research Funding and Regional Economies

Nathan Goldschlag, Stefano Bianchini, Julia Lane, Joseba Sanmartín Sola, Bruce Weinberg

NBER Working Paper No. 23018
Issued in January 2017
NBER Program(s):Labor Studies, Productivity, Innovation, and Entrepreneurship

Public support of research typically relies on the notion that universities are engines of economic development and that university research is a primary driver of high wage localized economic activity. However, the evidence supporting that notion is based on aggregate descriptive data, rather than detailed links at the level of individual transactions. Here we use new micro-data from three countries—France, Spain and the United States—to examine one mechanism whereby such economic activity is generated, namely purchases from regional businesses. We show that grant funds are more likely to be expended at businesses physically closer to universities than at those farther away. In addition, if a vendor has been a supplier to a grant once, that vendor is subsequently more likely to be a vendor on the same or related grants. Firms behave in a way that is consistent with the notion that propinquity is good for business; if a firm supplies a research grant at a university in a given year, it is more likely to open an establishment near that university in subsequent years than other firms.

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Document Object Identifier (DOI): 10.3386/w23018

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