The primary focus of this paper is the impact of knowledge creation and innovative activity on employment growth. A number of employment growth hypotheses are tested for counties in Iowa, Minnesota, Missouri, Kansas, Nebraska, South Dakota and North Dakota. We assume that new knowledge and innovative activity are embodied in patent filings for the years 1975-2000. Due to the spatial nature of the data, both spatially lagged dependant variables and spatial error models are employed. The results support the importance of knowledge creation and innovative activity as an important factor explaining employment growth in Heartland counties over the 1969-2000 period.


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