Determinants of Long-Run Regional Productivity: The Role of R&D, Human Capital and Public Infrastructure

43 Pages Posted: 5 Oct 2006

Date Written: September 2006

Abstract

In this paper we estimate the long-run relationship between regional total factor productivity, R&D, human capital and public infrastructure between 1980 and 2001. We take advantage of recent developments panel cointegration techniques that control for endogeneity of regressors to estimate cointegration vectors. Empirical evidence shows that there exists a long-run equilibrium between productivity level and the three kinds of capital; among them, human capital turns out to have the strongest impact on productivity. Regional productivity is found also to be positively affected by R&D activity and public infrastructure of neighbouring regions. Finally, results of the Granger-causality tests support the hypothesis that human capital and infrastructure Granger-cause productivity in the long-run while the opposite is not true; only for R&D stock is the bi-directional causality found.

Keywords: Total factor productivity, research and development, public infrastructure, human capital, panel cointegration

JEL Classification: O4, O18, R11, C23

Suggested Citation

Bronzini, Raffaello and Piselli, Paolo, Determinants of Long-Run Regional Productivity: The Role of R&D, Human Capital and Public Infrastructure (September 2006). Bank of Italy Economic Research Paper No. 597, Available at SSRN: https://ssrn.com/abstract=935010 or http://dx.doi.org/10.2139/ssrn.935010

Raffaello Bronzini (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Paolo Piselli

Bank of Italy ( email )

Via Milano, 64
00184 Rome
Italy

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