Knowledge-intensive Business Services, Knowledge Spillovers and Regional Growth. Part 3: Locational Structures

Part 3 of our research project on knowledge-intensive business services (KIBS) presents empirical evidence on their spatial distribution of knowledge-intensive business services in Austria and the determinants of their locational choice. Using highly granulated data at the municipality as well as the provincial level we find a very steep locational hierarchy of KIBS in Austria. KIBS suppliers concentrate in a few (often heavily specialised) regions, while in the bulk of regions KIBS density is rather thin. Thereby relative KIBS specialisation, in line with international evidence, is far above average in condensed areas (mainly the metropolitan regions with Vienna at the top) but very low in peripheral rural areas. In the light of our previous findings (Part 2) on the role of KIBS in knowledge spillovers (and therefore innovation and growth) this may pose a threat to a well-balanced spatial development in Austria. However, retributive regional policies aiming at a reallocation of KIBS providers to thinly populated regions may be inefficient due to our findings: our econometric analysis on the determinants of KIBS locations shows that their locational choice is mainly driven by a bundle of attributes that characterise urban regions and are based on agglomeration externalities. Therefore, we plead for KIBS policy measures that secure and develop "critical masses" in central (urban) regions, but better link enterprises at the periphery with the KIBS supply in those regions.