What Drives Technological Change in Regions? Relatedness and R&D Subsidies in the US from 1981 to 2010

R&D subsidisation is acknowledged as a major spurrer of the economic development of regions, but is seldom considered in the literature concerning regional diversification. Conversely, robust evidence has been gathered about the impact of relatedness on the ability of regions to explore new technological domains. The work employs patent data to assess the extent to which related and unrelated diversification processes in the United States, between 1981 and 2010, are influenced by the existing regional knowledge base and the magnitude of R&D public funds, providing evidence for both drivers by means of econometric estimations.