Determinants of regional productivity growth in Europe: An empirical analysis Tatyana Bulavskaya 1 , Henri L. F. de Groot 2,* , Gert-Jan M. Linders 2 and Ferdinand J. Paraguas 1 TNO, Delft, The Netherlands 2 VU University, Department of Spatial Economics, Amsterdam, The Netherlands Abstract: Understanding the sources of regional differences in productivity and the possibilities for mitigating them is at the heart of the debate on European regional economic policy. This study presents an empirical analysis of the determinants of regional productivity growth in Europe, using the most recent Cambridge Econometrics regional database supplemented with EuroStat data on education and R&D. We generate empirical estimates of a reduced-form equation explaining regional total factor productivity growth. The empirical model, based on innovation and catch-up to the technology frontier as engines of growth, allows for a steady state where productivity levels differ, but growth rates converge. We test whether aggregate regional productivity growth in a region depends on its level of human capital, the investments in R&D, and the productivity gap with the technology frontier. Results show that these variables affect regional productivity growth and that the effects are interrelated. Apart from a technology gap, absorptive capacity is important to realize catch-up. Results for agriculture, industry and services sectors reveal different patterns of regional productivity growth. The estimated model also features stable dynamic properties in response to an exogenous shock. Keywords: Semi-endogenous Growth, Regional Convergence, International Transfer of Technology, human capital, R&D. JEL codes: O18, O33, R12 * Corresponding author: hgroot@feweb.vu.nl . Department of Spatial Economics, De Boelelaan 1105, NL-1081 HV, Amsterdam, the Netherlands. 1