This study investigates whether geographically localized research and development (R&D) initiatives implemented by state universities and colleges (SUCs) in the Philippines generate short-run knowledge spillovers within their local economies. Using the Pili R&D Center in the Bicol Region as an empirical case study, the research employs spatial econometric techniques, including Local Moran’s I and spatial lag models, to assess economic dependence across 55 municipalities in Camarines Sur and Albay. The results indicate that geographic spillovers from the center remain largely limited to the host municipalities. Market activity and innovation outcomes are spatially concentrated among established actors with sufficient capital, while smaller producers face significant barriers to information and market access. The findings suggest that R&D funding alone is insufficient for broad local diffusion; instead, complementary interventions—such as targeted transport support, municipal-level extension services, and reduced digital distance—are necessary to enhance the local impact of university-led innovation.