How Do Non-R&I Factors Influence Innovation?

Why do some places in the UK see more innovation than others? Investment in research and innovation (R&I) plays an important role, but funding is only part of the story.  Businesses also depend on the people, infrastructure and wider conditions around them. Access to skilled workers, housing, good health, reliable transport and good internet connections can all shape the environment in which new ideas are developed and brought to market. These conditions vary widely across the UK, not only between regions but also between local areas within them.

This report explores how these wider local conditions are linked to innovation across the UK, using data on patents, trademarks and Innovate UK funding. It finds that innovation inequality is primarily local: in 2022, more than 80% of measured inequality in both patenting and trademarking arose from differences between local areas within the same UK region, showing how regional averages can hide important local differences. There is also no single recipe for innovation. Places receiving more Innovate UK support tend to record more innovation activity, although this mainly reflects long-standing differences between places rather than innovation rising soon after funding increases in a given place. Skills, housing and connectivity also matter, and for connectivity, how infrastructure is used matters more than whether it is simply present: rail station usage and full-fibre coverage are more closely linked to innovation than having a station or basic broadband. The report highlights why supporting innovation requires looking beyond funding alone, and how understanding the different strengths and challenges of individual places can help inform more effective, locally tailored innovation policies.

Keywords: Place-based Innovation, Geography of Innovation, Innovation Inequality, Non-R&I Factors, Innovate UK, Patents, Trademarks, Local Innovation Systems, Innovation Policy