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Regulations and technology gap in Europe: The role of firm dynamics

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  • Amoroso, Sara
  • Martino, Roberto

Abstract

In this paper, we develop a new firm-level measure of distance to the productivity frontier that accounts for international technology spillovers stemming from the use of imported intermediate goods. The trade-weighted technological distance to frontier is matched with sector- and country-level data on regulation and firm dynamics (entry and exit rates) of 16 European countries. Using our measure of trade-adjusted technology gap, we investigate the role of labour, capital, and product market regulatory frameworks in the technology catch-up process, gauging the effect of firms’ dynamics in mediating and moderating the impact of regulation on the technology gap.

Suggested Citation

  • Amoroso, Sara & Martino, Roberto, 2020. "Regulations and technology gap in Europe: The role of firm dynamics," European Economic Review, Elsevier, vol. 129(C).
  • Handle: RePEc:eee:eecrev:v:129:y:2020:i:c:s0014292120301811
    DOI: 10.1016/j.euroecorev.2020.103551
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    Keywords

    Innovation diffusion; Framework conditions; Business dynamics; Technological frontier; Intermediate inputs; Technology spillovers;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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