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Nonlinear Effects of Human Capital and R&D on TFP: Evidence from European Regions

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  • Arkadiusz Kijek

    (Faculty of Economics, Maria Curie-Sklodowska University, 20-031 Lublin, Poland)

  • Tomasz Kijek

    (Faculty of Economics, Maria Curie-Sklodowska University, 20-031 Lublin, Poland)

Abstract

The aim of the paper is to study the impact of human capital and R&D on Total Factor Productivity (TFP) from a nonlinear perspective. In the spirit of the theory of innovation-driven growth and models with thresholds in human capital and low-growth equilibria, we hypothesize that the impact of human capital and R&D on TFP is nonlinear. We also make an attempt to explain complementarities between R&D expenditures and human capital, applying developments in the R&D-based growth models. We use spatial panel data models to estimate the link among R&D, human capital, and TFP across the European regions between 2009 and 2014. Empirical evidence shows that there are decreasing returns to human capital and R&D in the European regional space. Moreover, R&D and human capital turn out to be strategic complements. Finally, regional TFP is found to be positively affected by TFP of neighboring regions.

Suggested Citation

  • Arkadiusz Kijek & Tomasz Kijek, 2020. "Nonlinear Effects of Human Capital and R&D on TFP: Evidence from European Regions," Sustainability, MDPI, vol. 12(5), pages 1-14, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:1808-:d:326221
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    3. Hernita Hernita & Batara Surya & Iwan Perwira & Herminawaty Abubakar & Muhammad Idris, 2021. "Economic Business Sustainability and Strengthening Human Resource Capacity Based on Increasing the Productivity of Small and Medium Enterprises (SMEs) in Makassar City, Indonesia," Sustainability, MDPI, vol. 13(6), pages 1-36, March.

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    human capital; R&D; TFP; regions;
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