Total factor productivity, intangible assets and spatial dependence in the European regions

Abstract This paper analyses the determinants of differences in efficiency levels by pursuing a twofold aim. First, we derive a regression based measure of regional TFP by estimating a spatial Cobb-Douglas production function for 199 European regions. Secondly, we investigate the determinants of the TFP levels by analyzing the role played by intangible factors: human, social and technological capital. The estimations are carried out by applying spatial 2SLS method and SHAC estimator to account for heteroskedasticity and spatial autocorrelation. It turns out that a large part of TFP differences across the European regions are explained by disparities in the intangible assets