Exploring the Link between Publicly Funded R&D Collaborations and Regional Technological Development 

Public investment in collaborative research and development (R&D) is increasingly seen as a way to reduce regional inequalities and stimulate innovation, but does it actually help regions develop new technological strengths? This paper provides new evidence that it does. Using a novel dataset that links 20 years of UK Research and Innovation (UKRI) funding to regional patenting activity through a bespoke machine learning approach, we examine whether publicly funded cross-regional collaborations translate into lasting technological development. Employing rigorous causal methods, we find that a £5 million grant distributed over three years increases regional patenting by around 3.25% and raises the likelihood of a region developing a new technological specialisation.

Our findings show that collaboration, not just funding, is the critical ingredient. Cross-regional partnerships, particularly those bringing universities and businesses together, generate the strongest innovation gains, while university-only or business-only collaborations have little impact. However, funding is most effective when it builds on existing regional capabilities, helping regions expand into related technologies rather than entirely new or highly complex fields. These results support smart specialisation policies that strengthen existing competitive advantages and suggest that designing effective collaborative networks may be just as important as the level of public investment itself.

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