Knowledge Spillovers and Total Factor Productivity: Evidence Using a Spatial Panel Data Model

23 Pages Posted: 6 Mar 2008 Last revised: 27 Apr 2015

See all articles by Manfred M. Fischer

Manfred M. Fischer

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

Martin Reismann

Vienna University of Economics and Business - Department of Economic Geography and Geoinformatics

Thomas Scherngell

AIT - Austrian Institute of Technology

Date Written: February 2008

Abstract

This paper investigates the impact of knowledge capital stocks on total factor productivity through the lens of the knowledge capital model proposed by Griliches (1979), augmented with a spatially discounted cross-region knowledge spillover pool variable. The objective is to shift attention from firms and industries to regions and to estimate the impact of cross-region knowledge spillovers on total factor productivity (TFP) in Europe. The dependent variable is the region-level TFP, measured in terms of the superlative TFP index suggested by Caves, Christensen and Diewert (1982). This index describes how efficiently each region transforms physical capital and labour into output. The explanatory variables are internal and out-of-region stocks of knowledge, the latter capturing the contribution of cross-region knowledge spillovers. We construct patent stocks to proxy regional knowledge capital stocks for N=203 regions over the 1997-2002 time period. In estimating the effects we implement a spatial panel data model that controls for the spatial autocorrelation due to neighbouring regions and the individual heterogeneity across regions. The findings provide a fairly remarkable confirmation of the role of knowledge capital contributing to productivity differences among regions, and add an important spatial dimension to the discussion, by showing that productivity effects of knowledge spillovers increase with geographic proximity.

Keywords: Total factor productivity, knowledge spillovers, European regions, panel data, spatial econometrics

JEL Classification: C23, O49, O52, R15

Suggested Citation

Fischer, Manfred M. and Reismann, Martin and Scherngell, Thomas, Knowledge Spillovers and Total Factor Productivity: Evidence Using a Spatial Panel Data Model (February 2008). Available at SSRN: https://ssrn.com/abstract=1102228 or http://dx.doi.org/10.2139/ssrn.1102228

Manfred M. Fischer (Contact Author)

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

Welthandelsplatz 1, D4
Vienna, 1020
Austria

Martin Reismann

Vienna University of Economics and Business - Department of Economic Geography and Geoinformatics ( email )

Augasse 2-6
Vienna A-1090, 1090
Austria

Thomas Scherngell

AIT - Austrian Institute of Technology ( email )

Donau-City-Strasse 1
Vienna, 1220
Austria

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
370
Abstract Views
2,005
rank
105,446
PlumX Metrics