Effects of inter-industry and spatial spillovers on regional productivity: Evidence from Spanish panel data

This paper examines the role of both intra and inter-industry spillovers when estimating regional aggregate production functions. To our knowledge, this is the first paper that examines technological and spatial externalities simultaneously using sector-level data. The proposed model also extends the standard spatial econometric models by modeling interregional (spatial) dependence through the economic criteria of migration flows. We apply our methodology to the Spanish provinces over the 2001-2013 period. Our results reveal the simultaneous presence of both Marshallian and Jacobian externalities. The spillovers of private production factors are negative in most of the sectors, indicating the presence of inter-regional and inter-sectoral competition for skilled labor and private capital. Our results also indicate that the core-periphery theory can be applied to both fully efficient and inefficient sectors, a finding that should be examined more deeply in the future.