Framework Conditions, Innovation and Productivity in European Regions

This paper uses regional structural indicators and firm-level data of the EIB Investment Survey to show that framework conditions and firm innovation inputs affect innovation performance and regional productivity growth. We argue that, in addition to more R&D investments and access to higher levels of human capital, improvements in the regional business environment-including the quality of institutions and infrastructure-can help firms close the gap with the technological frontier and support the economic development of European regions.