TITLE:
Contribution of Education and Innovation to Productivity among Mexican Regions: A Dynamic Panel Data Analysis
AUTHORS:
Vicente German-Soto, Luis Gutiérrez Flores
KEYWORDS:
Productivity, Education, Patents, Dynamic Panel Data, Autoregressive Models
JOURNAL NAME:
Theoretical Economics Letters,
Vol.5 No.1,
February
2,
2015
ABSTRACT: A dynamic panel data
(DPD) model is estimated to assess the contribution of the average schooling
years, the education expenditure and the inventive coefficient—as an approximation
for innovation—to the increased productivity of the Mexican states. The
potential difficulties of endogeneity and serial correlation are controlled by adopting
system General Method of Moments (GMM) procedures. The findings are compatible
with the theory. The importance of the lags is confirmed and the positive and
significant impacts on productivity tend to vary according to the income level
and the geographical location of the regions. Innovation is an important
contributor to northern, central and richer states’ productivity, but education
expenditure is important for the poorer states and scholarly attainment stands
out in the southern states. The analysis emerging from the model concludes that
these regional differences should be seen as a potential opportunity for
designing customized policies capable of increasing the productivity and not as
a weakness.