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New evidence on the sources of EU countries’ productivity growth—industry growth differences from R&D and competition

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  • Thomas Strobel

Abstract

Recent studies on productivity growth show how competition affects innovation and TFP growth in OECD countries, but do not explicitly account for sectoral parameter heterogeneity. This paper examines whether competition and innovation have a direct effect on labor productivity growth in EU goods-producing industries separated by three different industry types. The results show that the effect of R&D on labor productivity growth is not equal across industries, but rather depends on the innovation activities of sectors. The same is true for competition and labor productivity growth. The empirical evidence indicates that in unleveled industries (i.e. industries characterized by technologically unequal firms) like Specialized Goods Suppliers and Science-Based Innovators strong labor productivity growth originates with decreased competition and increased R&D, thereby supporting Schumpeterian arguments. The findings suggest Schumpeterian effects in Supplier-Dominated Goods-Producing Industries, but reveal decreasing labor productivity growth in these sectors when competition is strongly restricted. Copyright Springer Science+Business Media, LLC. 2012

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  • Thomas Strobel, 2012. "New evidence on the sources of EU countries’ productivity growth—industry growth differences from R&D and competition," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(3), pages 293-325, August.
    • Handle: RePEc:kap:empiri:v:39:y:2012:i:3:p:293-325
    DOI: 10.1007/s10663-011-9169-0
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    2. Arza,Valeria Luciana & Cirera,Xavier & Colonna,Agustina & Lopez,Emanuel, 2020. "Explaining Differences in the Returns to R&D in Argentina : The Role of Contextual Factors and Complementarities," Policy Research Working Paper Series 9219, The World Bank.
    3. Carolina Hintzmann & Josep Lladós-Masllorens & Raul Ramos, 2021. "Intangible Assets and Labor Productivity Growth," Economies, MDPI, vol. 9(2), pages 1-21, May.
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    More about this item

    Keywords

    Productivity growth; Competition; Innovation; Panel data; Industry analysis; L11; L16; L60; O31; O40; O52;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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