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Understanding multilevel interactions in economic development

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  • Goedhuys, Micheline

    () (UNU-MERIT)

  • Srholec, Martin

    () (TIK Centre, University of Oslo, and CERGE-EI, Prague)

Abstract

National framework conditions mediate the effect of technological capabilities of firms on their productivity. Although this has been recognized in the literature for a long time, a quantitative test that explicitly considers this hypothesis has been lacking. Using a World Bank datasets of about 19,000 firms in 42 countries, most of which are developing, we estimate a multilevel production function with effects of firm's technological capabilities nested in the national framework conditions. Our results confirm that various facets of firm's technological capabilities and national economic, technological and institutional conditions influence total factor productivity of firms. Furthermore, we find that the effects of the national conditions and firm's technological capabilities are closely intertwined with each other. Adherence to international standards, formal training of workers and access to technology through foreign ownership make more difference for productivity of firms in less developed countries, while R&D capabilities on the contrary boost significantly more performance of firms in countries at the technological frontier. Different features of the national framework are shown to be responsible for this.

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Bibliographic Info

Paper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 003.

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Date of creation: 2010
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Handle: RePEc:dgr:unumer:2010003

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Web page: http://www.merit.unu.edu

Related research

Keywords: Productivity; innovation; technological capability; institutions; multilevel modeling;

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  1. Djankov, Simeon & La Porta, Rafael & López-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," CEPR Discussion Papers 2953, C.E.P.R. Discussion Papers.
  2. Fagerberg, Jan & Srholec, Martin & Knell, Mark, 2007. "The Competitiveness of Nations: Why Some Countries Prosper While Others Fall Behind," World Development, Elsevier, vol. 35(10), pages 1595-1620, October.
  3. Fulvio Castellacci, 2007. "Evolutionary And New Growth Theories. Are They Converging?," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 585-627, 07.
  4. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003. "The Regulation of Labor," NBER Working Papers 9756, National Bureau of Economic Research, Inc.
  5. Jan Fagerberg & Martin Srholec, 2007. "National innovation systems, capabilities and economic development," Working Papers on Innovation Studies 20071024, Centre for Technology, Innovation and Culture, University of Oslo.
  6. Fagerberg, Jan, 1987. "A technology gap approach to why growth rates differ," Research Policy, Elsevier, vol. 16(2-4), pages 87-99, August.
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Cited by:
  1. Kemeny, Thomas, 2010. "Does Foreign Direct Investment Drive Technological Upgrading?," World Development, Elsevier, vol. 38(11), pages 1543-1554, November.
  2. Martin Srholec, 2011. "Understanding the heterogeneity of cooperation on innovation: Firm-level evidence from Europe," Working Papers on Innovation Studies 20111201, Centre for Technology, Innovation and Culture, University of Oslo.

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