Spatial distribution of new firms and firm-level innovation: Evidence from Turkey

This paper examines the spatial distribution of new firms and tests the impact of new firms' agglomeration on firm-level innovation. Our findings from a spatially unequal economy, Turkey, show that firms that are located in regions hosting more new firms have a higher propensity to be innovative. Moreover, we found that firms located in regions that are spatially connected to others with higher new firm formation are also more innovative. However, impact of local and spatial externalities created by agglomeration effects are conditional on the development level of regions.