The Impact of Knowledge Capital on Regional Total Factor Productivity

29 Pages Posted: 30 Jan 2008 Last revised: 27 Apr 2015

See all articles by James P. LeSage

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

Date Written: April 20, 2009

Abstract

This paper explores the contribution of knowledge capital to total factor productivity differences among regions within a regression framework. The dependent variable is total factor productivity, defined as output (in terms of gross value added) per unit of labour and physical capital combined, while the explanatory variable is a patent stock measure of regional knowledge endowments. We provide an econometric derivation of the relationship, which in the presence of unobservable knowledge capital leads to a spatial regression model relationship. This model form is extended to account for technological dependence between regions, which allows us to quantify disembodied knowledge spillover impacts arising from both spatial and technological proximity. A six-year panel of 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.

Keywords: Total factor productivity, knowledge spillovers, technological proximity, spatial Durbin model, European regions

JEL Classification: C11, C21, O47, O52, R11

Suggested Citation

LeSage, James P. and Fischer, Manfred M., The Impact of Knowledge Capital on Regional Total Factor Productivity (April 20, 2009). Available at SSRN: https://ssrn.com/abstract=1088301 or http://dx.doi.org/10.2139/ssrn.1088301

James P. LeSage (Contact Author)

Texas State University - McCoy College of Business Administration ( email )

Finanace and Economics Department
601 University Drive
San Marcos, TX 78666
United States
512-245-0256 (Phone)
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HOME PAGE: http://www.spatial-econometrics.com

Manfred M. Fischer

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics ( email )

Welthandelsplatz 1, D4
Vienna, 1020
Austria

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