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The EU-US total factor productivity gap : An industry-level perspective

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  • McMorrow, Kieran
  • Röger, Werner
  • Turrini, Alessandro Antonio

Abstract

The EU-US total factor productivity (TFP) growth gap since the mid-1990's is concentrated in a handful of market service industries (most notably retail trade) and in ICT-producing manufacturing, whilst the EU exhibits a stronger performance in a number of the network utilities. This paper explores the industry-specific determinants of the EU-US TFP growth gap using the EU KLEMS database. As found in previous analyses (e.g., Nicoletti and Scarpetta (2003); Griffith, Redding, and Van Reenen (2004); Inklaar, Timmer and Van Ark (2008)), TFP growth appears to be driven by catching-up phenomena associated with the gradual adoption of new-vintage technologies. Compared with previous analyses, TFP growth is also significantly driven by developments taking place at the "technological frontier," increasingly so since the mid-1990's. Industries with higher R&D expenditures and higher adoption rates for ICT-intensive technologies appear to exhibit higher TFP growth rates, whilst human capital has mostly a significant effect across countries. Regarding industry specific determinants, ICT producing industries appear to benefit from R&D in terms of stronger spillovers from TFP gains at the frontier; network utilities are strongly affected by improvements associated with reduced product market regulations; whilst the retail trade industry is significantly influenced by consumption dynamics which permit a better exploitation of scale economies.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7237.

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Date of creation: Mar 2009
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Handle: RePEc:cpr:ceprdp:7237

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Keywords: European Union; growth determinants; total factor productivity;

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References

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Cited by:
  1. Marco Fioramanti, 2009. "Estimation and Decomposition of Total Factor Productivity Growth in the EU Manufacturing Sector: a Stochastic Frontier Approach," ISAE Working Papers 114, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).

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