Estimating Regional Variations of R&D Effects on Productivity Growth by Entropy Econometrics

<title>Abstract</title> In this paper we adopt an entropy econometrics-based estimator to study regional variations in regression coefficients and apply it to analyse productivity growths generated by R&D activities at a regional level. Considering the possible effects of the region's own R&D stock as well as the spillovers produced in other regions, the paper proposes the use of an entropy-based technique to estimate these effects for a specific location. Depending on the degree of heterogeneity of the set of regions analysed, it is possible that some of these regions present characteristics that enable them to more easily convert R&D efforts (generated in the region itself or obtained from other regions by R&D spillovers) into productivity gains, whereas in other regions the effect of (direct or spillover generated) R&D activities may be irrelevant. We illustrate this idea with an empirical application for Spanish regions.