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The micro-level dynamics of regional productivity growth: The source of divergence in Finland

  • Bockerman, Petri
  • Maliranta, Mika

Productivity growth of the Finnish regions in 13 manufacturing industries is decomposed into micro-level sources by using plant-level data from 1975 to 1999. There are substantial regional differences in the intensity of productivity-enhancing restructuring. Dynamic competition is more intensive in Southern Finland, where the productivity level is also high. In contrast, plants located in Eastern Finland are equipped with low-productivity technologies owing to persistently sluggish micro-level dynamics. Productivity dispersion between plants within industries is greatest in Southern Finland. We argue that intensive experimentation is a more reasonable interpretation of this finding than large static X-inefficiency in this high productivity region.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 37 (2007)
Issue (Month): 2 (March)
Pages: 165-182

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Handle: RePEc:eee:regeco:v:37:y:2007:i:2:p:165-182
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