Abstract: We estimate the long-run effects of Research and Development (R & D) activities on Total Factor Productivity
(TFP) across the Spanish regions during 1980–2007. We use panel data cointegration methods and control for
spatial externalities linked to human and social capital. Our empirical results, robust to different specifications
and additional control variables, show a significant direct effect of public R & D capital on productivity. No
significant results are observed for private R & D capital. In contrast, the effect of patents is highly significant but
proves to be small. Furthermore, Spain has greatly benefited from importing technology from leading countries.
Spatial spillovers are crucial in explaining long-run productivity for the case of Spain. Human and social capital
exert direct positive impacts, however, their effects are geographically bounded and negative spatial spillovers
offset direct outcomes. Overall TFP increases when neighbouring territories engage in R & D activities.