Human Capital and Knowledge-Intensive Industries Location: Evidence from Soviet Legacy in Russia

<div>Do human capital endowments trump location for knowledge-intensive industries?</div><div>This article takes advantage of a natural experiment created by the end of the</div><div>Soviet planned economy in 1991, which had geographically distributed R&amp;D</div><div>manpower according to planned needs as opposed to a distribution determined</div><div>by a market economy. It examines the extent to which the planned economy</div><div>created a path-dependence in the location of post-Soviet human-capital intensive</div><div>production. The study finds that regions with more R&amp;D personnel in 1991</div><div>did better in the development of modern market-oriented knowledge-intensive</div><div>business services, like engineering and IT. Several explanations are offered for</div><div>this path-dependence, with an emphasis on human capital externalities being the</div><div>most plausible.</div>