Regional Productivity and Accessibility to Knowledge and Dense Markets

Accessibility to knowledge and local service markets can be assumed to explain regional growth performance. The role of regional supply of services and educated labour with respect to regional development are stressed by many researchers. In this paper we make an empirical analysis using panel data for Swedish municipalities. The purpose is to analyse the relationship between regional productivity measures as gross regional product per square kilometre and accessibility to educated labour. We also acknowledge the extension of the regional economy in terms of functionality and access to population as a measure of accessibility to labour and to purchasing power. We estimate first a cross-section model by using OLS. Second we employ a panel data model, using time distance access to population and the share local labour force with longer higher education as explanatory variables. In the analysis we compare the results for Sweden from the different models with other studies in this field. We find that local externalities for increasing returns are very important in the Swedish economy. Our estimated models yields a high level of goodness of fit, and the results indicates that the elasticity for longer higher education and population density are around unity in the Swedish economy with respect to performance of regional gross domestic product per square kilometre