Total Factor Productivity, intangible assets and spatial dependence in the European regions

Total factor productivity, intangible assets and spatial dependence in the European regions, Regional Studies. The aim of this paper is to analyse the determinants of the efficiency levels across the European regions. Firstly, a regression-based measure of regional total factor productivity is derived by estimating a spatial Cobb–Douglas production function. Secondly, the role played by intangible factors (human capital, social capital and technological capital) on total factor productivity levels is investigated by applying the spatial two-stage least-squares (2SLS) method and the spatial heteroskedasticy and correlation consistent (SHAC) estimator to account for both heteroskedasticity and spatial autocorrelation. It turns out that a large part of total factor productivity differences across the European regions is explained by disparities in the endowments of these intangible assets.