Employing data from Italian manufacturing firms, this paper attempts to check the existence of geographic and industry distance effects on the investment in information and communication technology (ICT). Physical distance is defined by the Euclidean distance between each possible pair of locations (municipalities) according to their geographical coordinates. Industry distance is measured by the firms’ industry distance according to the trade intensity between sectors. The model specified here refers to the combined spatial autoregressive model with autoregressive disturbances (SARAR) which are modelled simultaneously The results show that both geographical and industry proximity, have positive effects on the decision to invest in ICT. The econometric analysis shows that productivity, R&D activity, subsidies, reorganization and labour composition are good predictors of ICT investment.
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