# 22.12 Bridging the innovation gap. AI and robotics as drivers of China’s urban innovation

Andrés Rodríguez-Pose and Zhuoying You

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Abstract:

Artificial intelligence (AI) and robotics are revolutionising production, yet their potential to stimulate innovation and change innovation patterns remains underexplored. This paper examines whether AI and robotics can spearhead technological innovation, with a particular focus on their capacity to deliver where other policies have mostly failed: less developed cities and regions. We resort to OLS and IV-2SLS methods to probe the direct and moderating influences of AI and robotics on technological innovation across 270 Chinese cities. We further employ quantile regression analysis to assess their impacts on innovation in more and less innovative cities. The findings reveal that AI and robotics significantly promote technological innovation, with a pronounced impact in cities at or below the technological frontier. Additionally, the use of AI and robotics improves the returns of investment in science and technology (S&T) on technological innovation. AI and robotics moderating effects are often more pronounced in less innovative cities, meaning that AI and robotics are not just powerful instruments for the promotion of innovation but also effective mechanisms to reduce the yawning gap in regional innovation between Chinese innovation hubs and the rest of the country.

# 24.11 The Skill Requirements of the Circular Economy

Duygu Buyukyazici and Francesco Quatraro

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Abstract:

In response to global challenges related to resource scarcity and environmental concerns, the circular economy (CE) has emerged as a transformative model focused on resource eciency and waste reduction. As the discourse around the CE intensifies, understanding the skill requirements of the CE becomes imperative for effective policy-making, workforce development, and regional competitiveness. This paper addresses the scarcity of quantitative methods on this aspect and proposes a conceptual and empirical framework to identify, analyse, and monitor the skill requirements of the CE through a comprehensive and reproducible approach based on relative skill advantage, skill relatedness, and skill complexity measures. Accordingly, it identifies the essential and complementary skills within the CE by constructing unique skill spaces and documents their regional variation.

# 24.10 The importance of science for the development of new PV technologies in European regions

Maria Tsouri and Ron Boschma

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Abstract:

Studies show that local capabilities contribute to the green transition, yet little attention has been devoted to the role of scientific capabilities. The paper assesses the importance of local scientific capabilities and the inflow of scientific knowledge from elsewhere for the ability of regions in Europe to diversify into photovoltaic (PV) segments during the period 1998 to 2015, employing a combined dataset on patents and scientific publications. We find that local scientific capabilities matter, but not so much the inflow of relevant scientific knowledge from other regions, as proxied by scientific citations of patents in PV segments. Regions are also likely to diversify into a PV segment when they have technological capabilities related to other PV segments. Finally, we found that European regions are less likely to lose an existing PV segment specialization when they have intra-regional and extra-regional scientific capabilities in this PV segment.

# 24.09 How regions diversify into new jobs: From related industries or related occupations?

Jason Deegan, Tom Broekel, Silje Haus-Reve and Rune Dahl Fitjar

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Abstract:

This paper adds a multidimensional perspective to the study of related diversification. We examine how regions diversify into new jobs – defined as unique industry-occupation combinations – asking whether they do so from related industries or related occupations. We use linked employer-employee data for all labour market regions in Norway, covering the time period 2009 –2014. Diversification into new jobs is more likely in the presence of related occupations and industries in a region. Furthermore, occupational and industrial relatedness have complementary effects on diversification. Occupational relatedness and its interaction with industrial relatedness are particularly important for diversification into more complex activities.

# 24.08 Inventing modern invention: the professionalization of technological progress in the US

Matte Hartog, Andres Gomez-Lievano, Ricardo Hausmann & Frank Neffke

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Abstract:

Between the mid-19th and mid-20th century, the US transformed from an agricultural economy to the frontier in science, technology and industry. We study how the US transitioned from traditional craftsmanship-based to today’s science-based innovation. To do so, we digitize half a million pages of patent yearbooks that describe inventors, organizations and technologies on over 1.6M patent and add demographic information from US census records and information on corporate research activities from large-scale repeated surveys on industrial research labs. Starting in 1920, the 19th-century craftsmanship-based invention was, within just 20 years, overtaken by a rapidly emerging new system based on teamwork and a new specialist class of inventors, engineers. This new system relied on a social innovation: industrial research labs. These labs supported high-skill teamwork, replacing the collaborations within families with professional ties in firms and industrial research labs. This shift had wide-ranging consequences. It not only altered the division of labor in invention, but also reshaped the geography of innovation, reestablishing large cities as epicenters of technological progress and introduced new barriers to patenting for women and foreign-born inventors that have persisted into the 21st century.

# 24.07 Fueling the Fire? How Government Support Drives Technological Progress and Complexity

Carolin Nast, Tom Broekel & Doris Entner

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Abstract:

This study investigated two major trends shaping contemporary technological progress: the growing complexity of innovation and the increasing reliance on government support for private research and development (R&D). We analyzed United States patent data from 1981 to 2016 using structural vector autoregressions and uncovered an indirect interplay between these trends. Our findings showed that government incentives and support played a crucial role in spurring private-sector innovation. This government-fueled innovation, in turn, paved the way for advancements in more intricate and sophisticated technological areas.

Our study sheds light on the dual role of the United States’ innovation policy over the past four decades; the policy has not only accelerated technological advancement but also steered it toward increasingly complex domains. While this trend presents opportunities for economic growth and technological breakthroughs, it also poses challenges, including the potential for further escalating R&D costs. This research has significant implications for policymakers and industry leaders, suggesting a need for a balanced approach to fostering innovation while considering the long-term economic and technological landscape.

# 24.06 Bridging the innovation gap. AI and robotics as drivers of China’s urban innovation

Andrés Rodríguez-Pose & Zhuoying You

pdf

Abstract:

Artificial intelligence (AI) and robotics are revolutionising production, yet their potential to stimulate innovation and change innovation patterns remains underexplored. This paper examines whether AI and robotics can spearhead technological innovation, with a particular focus on their capacity to deliver where other policies have mostly failed: less developed cities and regions. We resort to OLS and IV-2SLS methods to probe the direct and moderating influences of AI and robotics on technological innovation across 270 Chinese cities. We further employ quantile regression analysis to assess their impacts on innovation in more and less innovative cities. The findings reveal that AI and robotics significantly promote technological innovation, with a pronounced impact in cities at or below the technological frontier. Additionally, the use of AI and robotics improves the returns of investment in science and technology (S&T) on technological innovation. AI and robotics moderating effects are often more pronounced in less innovative cities, meaning that AI and robotics are not just powerful instruments for the promotion of innovation but also effective mechanisms to reduce the yawning gap in regional innovation between Chinese innovation hubs and the rest of the country.

# 24.05 The geography of EU discontent and the regional development trap

Andrés Rodríguez-Pose, Lewis Dijkstra & Hugo Poelman

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Abstract:

While in recent times many regions have flourished, many others are stuck —or are at risk of becoming stuck— in a development trap. Such regions experience decline in economic growth, employment, and productivity relative to their neighbours and to their own past trajectories. Prolonged periods in development traps are leading to political dissatisfaction and unrest. Such discontent is often translated into support for anti-system parties at the ballot box. In this paper we study the link between the risk, intensity, and duration of regional development traps and the rise of discontent in the European Union (EU) —proxied by the support for Eurosceptic parties in national elections between 2013 and 2022— using an econometric analysis at a regional level. The results highlight the strong connection between being stuck in a development trap, often in middle- or high-income regions, and support for Eurosceptic parties. They also suggest that the longer the period of stagnation, the stronger the support for parties opposed to European integration. This relationship is also robust to considering only the most extreme Eurosceptic parties or to including parties that display more moderate levels of Euroscepticism.

# 24.04 Green Technological Diversification: The Role of International Linkages in Leaders, Followers and Catching-Up Countries

Nicoletta Corrocher, Simone Maria Grabner & Andrea Morrison

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Abstract:

To promote a more environmentally sustainable economy, countries need to broaden their innovation activities to include green technologies. In this process, the increasing global interconnectedness and internationalisation of innovative activities underlines the growing importance of external knowledge linkages. This paper examines how different categories of countries – technological leaders, catching-up countries and follower countries – diversify into green technologies by exploiting different types of external linkages through co-inventions with international partners. The dataset covers 49 countries over a period of 40 years. The results show that it is complementary linkages, rather than external linkages alone, that facilitate related diversification in the green sector. Moreover, while complementary linkages have a significant impact on the ability of catching-up countries and followers to diversify into less complex and widely diffused green technologies, the diversification pattern of leaders is more oriented towards complex technologies in their early stages. Therefore, green technology development policies should actively promote international cooperation as it has the potential to catalyse green catching-up and foster sustainable growth.

# 24.03 Critical Raw Materials and Renewable Energy Transition: The Role of Domestic Supply

George Yunxiong Li & Simona Iammarino

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Abstract:

Many critical raw materials (CRMs) – including rare metals and earth elements – are essential components in renewable energy products, and they work as an irreplaceable material basis for related technological innovation. However, global CRM supply chains are subject to significant risks, posing threats to the stability of the renewable energy industry. To address the challenges, a growing emphasis in both academic and policy circles is directed to de-risking supply chains through diversification and production reshoring. In this study, we investigate the relevance of domestic CRM production as a strategic measure to hedge against global supply shocks, providing competitive advantages for local renewable energy development and innovation. We explore this issue by focusing on two core renewable energy sectors: Wind and Solar energy. Analysing data from a panel of 128 countries spanning from 2007 to 2016, we examine the impact of domestic CRM supply capabilities on the competitiveness of the RE sectors and technological innovation, while controlling for various influencing factors. Our findings show that a stable CRM supply through domestic production significantly supports downstream RE product export and patent output, protecting local RE development from global material supply shocks. Using the case of renewable energy sector, this paper introduces the concept of “material-based technological regime” and underscores the critical importance of supply chain stability for key materials in bolstering national technological advantages. It provides valuable perspectives for both businesses and policymakers.