Although Sweden is one of the most R&D-intensive OECD countries, the importance of R&D spillovers in the country has not been systematically analyzed. This paper employs a cross sectional dataset of 264 R&D performing Swedish firms in 1996-97. With this set, knowledge production functions are estimated, in which industry groups are treated as subsamples. In addition, 160,614 non-R&D performing firms are used to examine the effects of R&D spillovers also among non R&D performers.

The estimations use three different weight methods for R&D that spills over from other industries: two input—output measures and a technology flow matrix in the spirit of Jaffe (1986). The results indicate that R&D performing firms gain in Total Factor Productivity from their own R&D. In two of the three weighing matrices spillovers from R&D result in higher Total Factor Productivity among R&D performers. Among non-R&D performers, the Total Factor Productivity effect of R&D spillovers is robustly positive and significant across specifications. Examination of the social returns to R&D from specific industries, one at a time, to other industries does not reveal substantial social effects beyond the effect on the own firm. It is reasoned that the most likely reason for the small size of R&D spillovers rests in the Swedish corporate structure, with most R&D being conducted by large multinationals.

This paper studies the innovative performance of 130 Swedish corporations during 1993-1994. The number of patents per corporation is explained as a function of the accessibility to internal and external knowledge sources of each corporation. A coherent way of handling accessibility measures, within and between corporations located across regions, is introduced. We examine the relative importance of intra- and interregional knowledge sources from 1) the own corporation, 2) other corporations, and 3) universities. The results show that there is a positive relationship between the innovativeness of a corporation and its accessibility to university researchers within regions where own research groups are located. Good accessibility among the corporation's research units does not have any significant effects on the likelihood of generation of patents. Instead the size of the R&D staff of the corporation seems to be the most important internal factor. There is no indication that intraregional accessibility to other corporations' research is important for a corporation's innovativeness. However, there is some indication of reduced likelihood for own corporate patenting when other corporate R&D is located in nearby regions. This may reflect a negative effect from competition for R&D labor.

Recent empirical evidence strongly supports Jacobs’s (1969) externality hypothesis that urban diversity provides a more favourable environment for economic development than urban specialization. In order to correctly gauge Jacobs’s hypothesis, economic development should be understood as a result of innovations. Furthermore, a relevant diversity measure should take into account the degree of diversity of the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. The results show that the number of patent applications in Swedish regions, is highly and positively dependent on regional technological specialization, quite the opposite of Jacobs’s prediction. The paper raises general questions about earlier empirical results. It is concluded that the size of regions is an important factor to consider, since this in itself may affect patenting intensity and technological diversity.