Technological innovation and productivity across Spanish regions

This article used a CDM three-stage structural model based on data from the Spanish technological innovation panel to analyse the differential impact of technological innovation on labour productivity in the three largest Spanish regions and the Spanish economy as a whole. Although a considerable number of studies have used national data to analyse this relationship, very few studies have done so using microdata at the regional level. The results suggest that in Andalusia and Madrid increases in labour productivity were only associated with the increased probability of product innovation, whereas in Catalonia they were only associated with process innovation. These results suggest a lack of convergence in business strategies to improve labour productivity in these regions. Therefore, business investment in R&D and public institution funding decisions on support for technological innovation should be aimed at improving these less effective innovation strategies for increasing labour productivity.