Discuss why innovation is very concentrated geographically; Discuss why tacit knowledge is a key determinant of the geography of innovation

Rothwell (2013) has shown that 93% of the world´s patent applications are filed by inventors living in metropolitan areas with just 23 percent of the world´s population. The more knowledge-intensive the economic activity, the more geographically clustered it tends to be. Tacit knowledge is a key determinant of the geography of innovative activity. • spatial stickyness and social interaction: This approach adopts the learning-by-interacting model as the cornerstone of its conceptual framework. According to this perspective, knowledge does not flow unidirectionally from technology producers to users. Instead, users provide tacit and proprietary, codifiable knowledge to producers in order to enable the latter to devise innovative solutions to users’ practical problems. But, at the same time, by supplying users with innovative technologies, producers are also sharing their tacit and other proprietary knowledge with their customers. patent applicants in analytically based industries cite other patents originating in the same city more frequently than they cite patents originating non-locally. Furthermore, they find that patent citations are more likely to be localized in the first year following the establishment of the patent, with the effect fading over time, as the knowledge diffuses more widely. 1. circulation of knowledge and spillovers occur withing established networks of scientists (local ‘buzz’) 2. knowledge production relies on scientists and intellectual talents (which Richard Florida calls the ‘creative class’), and only few places offer attractive employment opportunities for these workers. In turn, this creates a virtous circle. 3. locations that offer high-quality of life have a further advantage in the ‘battle for talents’. These are often cities with a critical mass of creative activity and workers, strong social diversity and tolerance