Embed Doc
Copy Link
Readcast
Collections

CommentGo Back

Download

Electronic copy available at: http://ssrn.com/abstract=1471435

Copyright © 2009 by William R. KerrWorking papers are in draft form. This working paper is distributed for purposes of comment anddiscussion only. It may not be reproduced without permission of the copyright holder. Copies of workingpapers are available from the author.

Breakthrough Inventions andMigrating Clusters ofInnovation

William R. Kerr

Working Paper

10-020

Electronic copy available at: http://ssrn.com/abstract=1471435

Breakthrough Inventions andMigrating Clusters of Innovation

William R. Kerr



Harvard Business SchoolBoston MASeptember 2009HBS Working Paper 10-020

Abstract

We investigate the speed at which clusters of invention for a technology migrate spatiallyfollowing breakthrough inventions. We identify breakthrough inventions as the top onepercent of US inventions for a technology during 1975-1984 in terms of subsequent citations.Patenting growth is signi…cantly higher in cities and technologies where breakthrough in-ventions occur after 1984 relative to peer locations that do not experience breakthroughinventions. This growth di¤erential in turn depends on the mobility of the technology’slabor force, which we model through the extent that technologies depend upon immigrantscientists and engineers. Spatial adjustments are faster for technologies that depend heav-ily on immigrant inventors. The results qualitatively con…rm the mechanism of industrymigration proposed in models like [Duranton, G., 2007. Urban evolutions: The fast, theslow, and the still. American Economic Review 97, 197–221].

JEL Classi…cation:

F2, J4, J6, O3, O4, R1, R3.

Key Words:

Agglomeration, Clusters, Entrepreneurship, Invention, Mobility, Realloca-tion, R&D, Patents, Scientists, Engineers, Immigration.



Comments are appreciated and can be sent to wkerr@hbs.edu. I am grateful to Ajay Agrawal, MeganMacGarvie, Ed Glaeser, Stuart Rosenthal, Will Strange, and seminar participants at Kau¤man FoundationCities and Entrepreneurship Conference, NBER Productivity, and UBC Sauder for feedback on this work. Thisresearch is supported by Harvard Business School, the National Science Foundation, the Innovation Policy andthe Economy Group, and the MIT George Schultz Fund. A previous version of this paper was titled "Immigrantsand Spatial Adjustments in US Invention."

Electronic copy available at: http://ssrn.com/abstract=1471435

1 Introduction

The spatial location of invention can shift substantially over a short period of time. The SanFrancisco Bay Area grew from 5% of US domestic patents in 1975-1984 to over 12% in 1995-2004,while the share for New York City declined from 12% to 7%. Smaller cities like Austin, TX, andBoise City, ID, seem to have become clusters of innovation overnight. While the correlation inpopulation levels of US cities between 1975-1989 and 1990-2004 is 0.99, the correlation for citypatenting levels is signi…cantly weaker at 0.88. This correlation further declines to 0.64 whenlooking at the spatial patenting distribution within 36 basic technology groups.Despite the prevalence of these movements, we know very little about what drives spatialadjustments in US invention, the speed at which these reallocations occur, and their economicconsequences. In this paper, we investigate whether breakthrough inventions draw subsequentresearch e¤orts for a technology to a local area. A recent theoretical model by Duranton (2007)describes the spatial evolution of cities and industries through the reallocation of productionacross cities following discrete technological advances in locations outside of the industry’s cur-rent core. Centers of innovation are dictated by where frontier inventions occur, and productionfollows the location of invention to achieve agglomeration economies. While this model …tsthe distribution of cities and industries well in several countries (e.g., Duranton 2007, Findeisenand Südekum 2008), only anecdotal evidence has been o¤ered that the measured industry-levelchurning across cities is due to technological advances that are spatially distant from existingclusters.We investigate this missing link by comparing the growth of patenting in cities where break-through patents occurred to peer cities where they did not or were relatively scarce. Weidentify by technology the top one percent of US patents during the 1975-1984 period in termsof subsequent citations, which we refer to as breakthrough patents. Our analysis comparesthe technology-level growth in patenting in cities where these breakthrough patents occurredrelative to similar cities also innovating in the technology in question. We do …nd evidence of localized patent growth after breakthrough inventions. For example, looking just among theten largest patenting cities for a technology during 1975-1984, a one standard deviation increasein the relative presence of breakthrough patents results in a 20% greater patenting growth for1990-2004.To further characterize this relationship, we examine whether the spatial reallocation occursfaster if the technology has a more spatially mobile workforce. We proxy the latter throughthe extent to which the technology depends upon immigrant scientists and engineers (SEs).Immigrants are very important for US invention, representing 24% and 47% of the US SE work-force with bachelor’s and doctorate educations in the 2000 Census of Populations, respectively.1