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We try to identify the determinants of regional variation in both exploitative and exploratory innovative competencies. Hereby, we focus on how a knowledge‐creation mechanism with specialized externalities differs from one with diversified externalities. Innovative competence in the US is measured by local patenting performance; exploitative and exploratory patenting performances are distinguished by the degree of backward citation. Based on the extended knowledge‐production function, including the two agglomeration externalities, our findings show that specialized externalities are associated with exploitation, while diversified externalities are positively related with both exploration and exploitation, regardless of industrial sectors. [ABSTRACT FROM AUTHOR]

The development of new industries demands access to local capabilities. Little attention has yet been paid to the role of spillovers from neighbour regions for industrial diversification, nor has the role of network linkages between neighbour regions been investigated. As the spread of capabilities has a strong geographical bias, we expect regions to develop new industries in which their neighbour regions are specialized. To test this hypothesis, we analyse the development of new industries in US states during the period 2000-2012. We show that a US state has a higher probability of developing a comparative advantage in a new industry if a neighbour state is specialized in that industry. We also show that neighbour US states have more similar export structures. This export similarity seems to be explained by higher social connectivity between neighbour states, as embodied in their bilateral migration patterns. [ABSTRACT FROM AUTHOR]

Recently, Duranton and Turner estimated the impact of interstate highways on the average growth of US cities between 1983 and 2003. By estimating a structural model, one of their striking points is that increasing a city's initial stock of highways by 10 per cent leads to a 1.5 per cent positive respond of the city's employment over the sample period. This note mainly argues that their investigation leaves out potential spillovers of labour input from neighbouring growth centres/cities in the steady-state directly implied by the open city assumption. More specifically, this contribution readily extends Duranton and Turner's work by a general equilibrium effect induced by the urban system's labour market fluctuations which is a direct consequence of the open city assumption. [ABSTRACT FROM AUTHOR]