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The consideration of spatial effects at a regional level is becomingincreasingly frequent and the work of Anselin (1988), among others, hascontributed to this. This study analyses, through cross-section estimationmethods, the influence of spatial effects in productivity (product per worker)in the NUTs III economic sectors of mainland Portugal from 1995 to 1999 andfrom 2000 to 2005 (taking in count the availability of data), considering theVerdoorn relationship. To analyse the data, by using Moran I statistics, it isstated that productivity is subject to a positive spatial autocorrelation(productivity of each of the regions develops in a similar manner to each ofthe neighbouring regions), above all in services. The total of all sectorspresent, also, indicators of being subject to positive autocorrelation inproductivity. Bearing in mind the results of estimations, it can been that theeffects of spatial spillovers, spatial lags (measuring spatial autocorrelationthrough the spatially lagged dependent variable) and spatial error (measuringspatial autocorrelation through the spatially lagged error terms), influencethe Verdoorn relationship when it is applied to the economic sectors ofPortuguese regions (Martinho, 2011).

Spatial Effects and Verdoorn Law in the Portuguese Context