APPLIED MICRO: Colocation of Production and Innovation – Evidence from the United States; Professor Wolfgang Keller (University of Colorado-Boulder)

Abstract

Manufacturers perform most of US patenting and R&D. The decades-long decline of US manufacturing employment raises concerns that US innovation will follow in this downward trend. We investigate the relationship between physical production and innovation by constructing a new dataset encompassing all US firms and their plants according to location geocodes and production versus innovation function within the firm. Preliminary findings indicate that firms with both production and innovation plants patent substantially more than other firms, and this effect is largely driven by firms that have production and innovation plants in close geographic proximity.