Exploring size and agglomeration effects on public research productivity

The paper assesses the empirical foundation of two largely held assumptions in science policy making, namely scale and agglomeration effects. According to the former effect, scientific production may be subject to increasing returns to scale, defined at the level of administrative units, such as institutes or departments. A rationale for concentrating resources on larger units clearly follows from this argument. According to the latter, scientific production may be positively affected by external economies at the geographical level, so that concentrating institutes in the same area may improve scientific spillover, linkages and collaborations. Taken together, these arguments have implicitly or explicitly legitimated policies aimed at consolidating institutes in public sector research and at creating large physical facilities in a small number of cities. The paper is based on the analysis of two large databases, built by the authors from data on the activity of the Italian National Research Council in all scientific fields and of the French INSERM in biomedical research. Evidence from the two institutions is that the two effects do not receive empirical support. The implications for policy making and for the theory of scientific production are discussed.