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Do Local Knowledge Spillovers Matter for Development? An Empirical Study of Uruguay’s Software Cluster

Authors
Journal
World Development
0305-750X
Publisher
Elsevier
Publication Date
Volume
36
Issue
10
Identifiers
DOI: 10.1016/j.worlddev.2008.01.003
Keywords
  • Local Knowledge Spillovers
  • Innovation
  • Clusters
  • Software Industry
  • Uruguay
  • Latin America
Disciplines
  • Economics

Abstract

Summary In economically advanced countries, local knowledge spillovers (LKS) between agglomerated firms are seen as major drivers of regional innovation and growth. In contrast, innovation research focusing on developing countries has emphasized international linkages, and has largely neglected LKS. This paper assesses the importance of LKS for innovation of clustered firms in a developing-country setting. An econometric analysis with new survey data from software firms in Montevideo, Uruguay, shows that LKS have a significantly positive impact on firms’ innovation performance through labor mobility, company spin-offs, and informal interactions among actors. LKS are also shown to be highly important relative to other sources of knowledge.

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