Intangible Capital as a Driver of Labor Productivity in Regions and Industries: Evidence of the Spanish Case

ABSTRACT In the last decade, many studies discussed the impact of intangible investment on firms' performance. However, comparing the effect of different types of intangible investments at regional and sectoral level is not well explored. The paper aims to fill this gap by assessing the impact of several intangible capital on labor productivity using for the first‐time updated data for the period 2000–2019. Adopting panel data techniques and system GMM, the results show that regions with higher endowments of intangible capital get higher levels of labor productivity. The study results also highlight the importance of differentiating between different sectors and types of intangible capital as they have different impact on productivity labor. In the primary sector only investments in R&D result in additional productivity gains. In the manufacturing industry, investments in R&D and software result in additional productivity gains while the service sector also increases labor productivity through other intangibles assets with innovative property such as mineral exploration, entertainment, and artistic originals.