Spatial Spillover of Product Innovation in the Manufacturing Sector: Evidence from India

This study analyzes the geography of innovation in India by performing exploratory spatial data analysis (ESDA) on the product innovation of the manufacturing sector of the 23 states for the year 2013–2014. It is found that spatial clustering is prevalent for product innovation majorly among the northern region, and these results are also supported by local indicators of spatial association (LISA) statistics. This exploratory spatial data analysis is extended to the sub-sectoral product innovation categorized as “analytical” and “synthetic” knowledge-based sectors that constitute applied research and basic research. It is found that analytical knowledge or applied research is relatively more concentrated than synthetic knowledge or basic research. Further, based on ordinary least square (OLS) and spatially lagged X (SLX) model, this study found that the manufacturing sector’s product innovation for each region is positively influenced by access to finance, formal research, and age. This study is based on “The India 2014 Enterprise Survey Data Set” collected by the World Bank Group.