The literature has documented a large degree of heterogeneity across firms in terms of productivity. In this article, I focus on market potential as a source of differences in productivity across Spanish manufacturing firms. Market potential is conditioned by the existing transport infrastructure. Transport infrastructure investment improves accessibility to input and output markets and thus increases market potential. Market potential is measured by travel time through the real transport network and takes into account the immense improvements that have taken place in Spain over the last decades. The results show a significant positive effect of market potential on firm-level productivity, which is robust to various estimation methods. This indicates an important mechanism of how road infrastructure improvements can generate wider economic impacts.

Digital transformation plays an increasingly important role in the growth and competitiveness of small and medium-sized enterprises (SMEs), yet little is known regarding spatial inequalities in their adoption of advanced digital technologies. Using recent data from the Flash Eurobarometer 486, we study the spatial patterns of drivers for the implementation of new digital technologies in SMEs in Europe. In our analysis, the focus is on the possible influence of location. Considerable heterogeneity of SMEs is found in their propensity to adopt advanced digital technologies related to the strength of the local business environment and to the urban/rural hierarchy.Plain English Summary: European SMEs and Digitalisation: The adoption of digital technologies favours the competitiveness, resilience, and internationalisation of firms, but SMEs, which form the backbone of the EU economy, are lagging behind. A recent survey reveals that location greatly influences the probability that European SMEs adopt digital technology. Rural and small-town SMEs are less likely to be adopters, even when country, sector, and firm-specific characteristics are taken into account. However, good business environments always encourage the adoption of digitalisation technologies, whatever the geographic location of an SME. Innovators tend to be adopters, especially when they employ green innovation or management innovation. Larger SMEs, companies that are part of a business group, grow more rapidly, and/or export, are all more likely to adopt digital technologies. Policy-makers need to contemplate the urban/rural-divide and promote strong business environments in all types of locations. Public encouragement towards innovation is likely to indirectly promote easier access to digital technologies.

The economic crisis which began in 2008 has had a far-reaching impact, including effects on the innovation behaviour of firms. Many companies have reduced their innovation-related activities, although some firms have been more resilient than others. Using a representative microdata panel of Spanish firms, we study the probability of companies abandoning in-house R&D during the crisis and its relationship to regional and policy factors. We find significant regional heterogeneity related to regional economic size and the type of the regional innovation system; regional government R&D support only reduces R&D abandonment rates in regions where a strong system of knowledge exploitation is in place.

The depopulation of rural areas in both developed and developing countries has become a complex problem with important implications for issues of equality and sustainability. We present a spatial exploratory analysis of the multidimensional factors related to the depopulation of Spain's rural areas. Using highly granular population data to estimate experienced population density allows us to highlight significant differences compared to the conventional administrative boundary in terms of the usual definition of densities. Based on this, we develop a new typology of declining rural areas that takes into account access to urban areas. While most rural areas have been suffering depopulation over the last decades, our results also show that rural areas themselves are not a homogeneous group and that rural areas show strong heterogeneity along different dimensions associated with growth and decline.

Innovation activities of firms tend to be highly persistent. Yet, little is still known about potential spatial contingencies affecting the degree of persistence. This paper analyses the influence of local knowledge spillovers on firms’ persistence in innovation activities. Using a representative panel data set of firms in Germany from 2002 to 2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers, we find that the local patenting activity positively moderates persistency in innovation activities. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence attenuates with increasing distance and vanishes beyond 30 kilometres in manufacturing and beyond 20 kilometres in services.