The impact of knowledge spillovers on total factor productivity revisited: New evidence from selected European capital regions

This paper aims at identifying the contribution of knowledge capital to total factor productivity differences among European sub-national regions within a spatial econometric regression framework. Special emphasis is laid on the estimation of interregional spillovers between the Western and Eastern European regions, focusing on the triangle of capital regions Vienna-Budapest-Bratislava. By accounting for human capital stocks, the results suggest lower spillover effects emanating from patent activities. Moreover, Vienna appears to be the largest contributor to productivity increases in Bratislava. Budapest's productivity seems to be sensitive to the knowledge and human capital endowments of the EU, but less so to those of Vienna.