Estimates and Inferences of Knowledge Capital Impacts on Regional Total Factor Productivity
James P. LeSage
Texas State University - McCoy College of Business Administration
Manfred M. Fischer
Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics
July 14, 2010
This paper explores the contribution of knowledge capital to total factor productivity differences among regions within a regression framework. We provide an econometric derivation of the relationship and show that the presence of latent/unobservable regional knowledge capital leads to a model relationship that includes both spatial and technological dependence. This model specification accounts for both spatial and technological dependence between regions, which allows us to quantify spillover impacts arising from both types of interaction. Sample data on 198 NUTS-2 regions spanning the period from 1997 to 2002 was used to empirically test the model, to measure both direct and indirect effects of knowledge capital on regional total factor productivity, and to assess the relative importance of knowledge spillovers from spatial versus technological proximity.
Number of Pages in PDF File: 30
Keywords: Total factor productivity, knowledge spillovers, technological proximity, spatial Durbin model, European regions
JEL Classification: C11, C21, O47, O52, R11working papers series
Date posted: September 24, 2010
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