Abstract
The paper assesses geographic spillovers of firms’ total factor productivity (TFP) through the lens of spatial econometrics. The aim is to use patent data to link the concepts of productivity and innovation, as well as to shed light on the role played by industrial agglomeration economies. TFP estimates are based on a panel of around sixteen thousand Italian manufacturing firms surveyed in the 2004-2010 period, allowing for labor and capital productivity coefficients to vary over sectors of activity. The TFP spillover is then estimated using a spatial autoregressive model with spatial autoregressive disturbances focused on 2010 firm-level geo-referenced data. The results show that firm TFP levels benefit from both the productivity spillovers originated by neighboring firms and the exogenous productivity shocks to the latter. To be part of an agglomeration economy results in productivity advantages. The location in a patent-intensive area acts in the sense of strengthening these effects but results, in turn, to be an advantage also for firms outside districts, thus corroborating the findings of an active role played by innovation in enhancing productivity.
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