The contributions of human capital, R&D spending and convergence to total factor productivity growth

The study investigates the drivers of total factor productivity (TFP) growth, covering 99 European regions from 31 countries over the period 2000-13. It shows that human capital endowment had a positive effect upon TFP growth, particularly in advanced regions, but the effect from regions' own research and development (R&D) expenditures was largely absent. The effects of human capital and R&D on TFP growth varied with the productivity gap. Further, there was a threshold effect in convergence, where stronger TFP growth was associated with both a larger productivity gap and a higher initial level of productivity. Spatial spillover effects had a positive impact upon TFP growth.