Social and Behavioral Sciences Commons^™

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 …