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This paper assesses the extent to which absorptive capacity determines knowledge flows’ impact on regional innovation. In particular, it looks at how regions with large absorptive capacity make the most of external inflows of knowledge and information brought in by means of inventor mobility and networks, and fosters local innovation. The paper uses an unbalanced panel of 274 regions over 8 years to estimate a regional knowledge production function with fixed-effects. It finds evidence that inflows of inventors are critical for wealthier regions, while it has more nuanced effects for less developed areas. It also shows that regions’ absorptive capacity critically adds a premium to tap into remote knowledge pools conveyed by mobility and networks.
