What Explains the Quantity and Quality of Local Inventive Activity?

We geocode a data set of patents and their citation counts, including citations from abroad. This allows us to examine both the quantity and quality of local inventions. We also refine our data on local academic R&D to explore effectsnfrom different fields of science and sources of R&D funding. Finally, we incorporate data on congressional earmarks of funds for academic R&D. With one important exception, results using citation weighted patents are similar to those using unweighted patents. For example, estimates of the returns to density (jobs per square mile) are only slightly changed when using citation weighted patents as the dependent variable. But stimates of returns to city size (urbanization effects) are quite sensitive to the choice of dependent variable. Local human capital is the most important determinant of per capita rates of patenting. A 1 percent increase in the adult population with a college degree increases the local patenting rate by about 1 percent. With few exceptions, there is little variation across fields of science in them contribution of academic R&D to patenting rates. The exceptions are computer and life sciences, where the effects are smaller. There is greater variation in the contribution of R&D funded by different sources - academic R&D funded by the federal government generates smaller increases in patenting rates than R&D funded by the university itself. This effect is somewhat stronger for federally funded applied R&D than for basic R&D. We also find small negative effects for cities with greater exposure to academic R&D allocated by congressional earmarks. We discuss the implications of these results for policy and future research