Abstract: Coordination failures can explain high and low levels of innovation/research and design (R & D) investment across societies, because a tipping point creates a high and low investment equilibrium. This manuscript investigates how transportation infrastructure can move this tipping point. This manuscript uses diﬀerent infrastructural legacies left by the ﬁnal partition of Poland (1815 to 1918) to analyze the aforementioned effect on private ﬁrms’ innovation/R & D spending across sparsely populated spaces. I use a spatial regression discontinuity on an original data-set of 145,767 European Union Structural Funds projects across Poland to test if transportation infrastructure aﬀects where EU innovation grants are awarded. Preliminary ﬁndings support the claim that in sparsely populated areas, firms located within a more expansive transportation infrastructure engage in higher levels of innovation.
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