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High growth and progressive regions possess a culture that promotes innovation. In-novation depends on a region's ability to use its own existing knowledge and knowledge generated elsewhere. This paper demonstrates the importance of the ability to absorb external knowledge in ex-plaining innovation productivity for 106 U.S. metropolitan areas. Using a spatial interaction model of patent citation flows with origin and destination dependence, the destination fixed-effects coefficients provides a measure of a region's absorptive capacity. We identify local conditions that shape a region's absorptive capacity and demonstrate it has a positive and significant impact on innovation productivity. [ABSTRACT FROM AUTHOR]