We investigate the impact of local and foreign forms of knowledge spillover on productivity growth inequalities in Spanish regions. In each sector and region such inequalities will depend on the innovative capacity of the region and on local spillovers emanating from proximity to innovation producers and from the composition of economic activity in the region. Foreign spillovers will be mainly from trade with other regions or countries. Panel estimation results indicate that local sector human capital and specialisation patterns, public-R&D efforts—both local and from other regions—and international technological imports reduce these growth differentials. The regional level of development and sector technological characteristics will qualify these results.
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