The Long Run Effects of R&D Place-based Policies: Evidence from Russian Science Cities

The Institute of Economics will hold a meeting of its Seminar Series on Thursday, June 13, 2019: Paolo Zacchia from IMT will present the paper "The Long Run Effects of R&D Place-based Policies: Evidence from Russian Science Cities" (with Helena Schweiger and Alexander Stepanov).

ABSTRACT: We study the long-run effects of historical place-based policies targeting R&D: the creation of Science Cities in former Soviet Russia. The establishment of Science Cities and the criteria for selecting their location were largely guided by idiosyncratic considerations of military and strategic nature. We compare the current demographic and economic characteristics of Science Cities with those of appropriately matched localities that were historically similar to them. We find that in the modern Russian economy, despite the massive cuts in government support to R&D that followed the dissolution of the USSR, Science Cities host more highly skilled workers and more developed R&D and ICT sectors; they are the origin of more international patents; and they generally appear to be more productive and economically developed. Within a spatial equilibrium framework, we interpret these findings as the result of the interaction between agglomeration economies and path-dependence forces. In addition, we rule out alternative explanations about the differential use of public resources, and we find limited support for a case of equilibrium reversion. Lastly, an analysis of firm-level data suggests that locating closer to Science Cities generates stronger spillover effects on firms' innovation and performance indicators.