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Firm heterogeneity and endogenous regional disparities

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  • Carlo Altomonte
  • Italo Colantone

Abstract

We exploit the census of Romanian firms to provide a microfounded analysis of the sources of regional disparities in the country. To this extent, we adapt to the regional case a decomposition of firm-level output dynamics based on semi-parametric productivity estimates. The methodology, robust to different techniques of TFP estimation, allows us to analyze the sources of regional disparities controlling for the heterogeneity in firms?characteristics. In particular, we measure various compositional effects of multinational enterprises (MNEs)on regional growth, finding that regional disparities are to a large extent endogenous to the interaction between firm-level dynamics and initial market conditions.
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Suggested Citation

  • Carlo Altomonte & Italo Colantone, 2008. "Firm heterogeneity and endogenous regional disparities," Journal of Economic Geography, Oxford University Press, vol. 8(6), pages 779-810, November.
    • Handle: RePEc:oup:jecgeo:v:8:y:2008:i:6:p:779-810
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    File URL: http://hdl.handle.net/10.1093/jeg/lbn019
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    Cited by:

    1. Naiquan Liu & Xinyue Ye & Huimin Yang & Ying Li & Mark Leipnik, 2014. "Manufacturing firm heterogeneity and regional economic growth difference in China," Regional Science Policy & Practice, Wiley Blackwell, vol. 6(2), pages 213-230, June.
    2. Hyungna Oh, 2012. "Aggregation bias in stochastic frontier models employing region-level data: an empirical analysis with Korean manufacturing data," Applied Economics Letters, Taylor & Francis Journals, vol. 19(9), pages 813-821, June.
    3. Francesco Aiello & Fernanda Ricotta, 2014. "Firm heterogeneity in productivity across Europe. What explains what?," ERSA conference papers ersa14p808, European Regional Science Association.
    4. Merlevede, Bruno & Schoors, Koen & Spatareanu, Mariana, 2014. "FDI Spillovers and Time since Foreign Entry," World Development, Elsevier, vol. 56(C), pages 108-126.
    5. Bruno Merlevede & Victoria Purice, 2014. "Distance, Time since Foreign Entry, and Knowledge Spillovers from Foreign Direct Investment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/896, Ghent University, Faculty of Economics and Business Administration.
    6. Merlevede, Bruno & Schoors, Koen & Spatareanu, Mariana, 2014. "FDI Spillovers and Time since Foreign Entry," World Development, Elsevier, vol. 56(C), pages 108-126.
    7. Castellani, Davide & Pieri, Fabio, 2013. "R&D offshoring and the productivity growth of European regions," Research Policy, Elsevier, vol. 42(9), pages 1581-1594.
    8. Karolien Lenaerts & Bruno Merlevede, 2018. "Indirect productivity effects from foreign direct investment and multinational firm heterogeneity," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 377-400, May.
    9. Francesco Aiello & Fernanda Ricotta, 2016. "Firm heterogeneity in productivity across Europe: evidence from multilevel models," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(1), pages 57-89, January.
    10. Fulvio Castellacci, 2014. "Service Firms Heterogeneity, International Collaborations and Export Participation," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 259-285, June.
    11. Vojtěch Kadlec & Viktor Květoň & Jana Vlčková & Jiří Blažek & Petr Horák, 2023. "Contrasting patterns and dynamics of patent offshoring in European regions," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1300-1326, August.
    12. Rodríguez-Pose, Andrés & Hardy, Daniel, 2017. "Firm competitiveness and regional disparities in Georgia," LSE Research Online Documents on Economics 67543, London School of Economics and Political Science, LSE Library.
    13. Karolien Lenaerts & Bruno Merlevede, 2016. "Supply chain fragmentation, input--output tables and spillovers from foreign direct investment," Economic Systems Research, Taylor & Francis Journals, vol. 28(3), pages 315-332, September.
    14. K. Lenaerts & B. Merlevede, 2012. "Supply Chain Fragmentation and Spillovers from Foreign Direct Investment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/822, Ghent University, Faculty of Economics and Business Administration.
    15. Vujanović, Nina & Stojčić, Nebojša & Hashi, Iraj, 2021. "FDI spillovers and firm productivity during crisis: Empirical evidence from transition economies," Economic Systems, Elsevier, vol. 45(2).
    16. K. Lenaerts & B. Merlevede, 2014. "FDI Spillovers and Multinational Firm Heterogeneity," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/879, Ghent University, Faculty of Economics and Business Administration.
    17. Jean Dubé & Cédric Brunelle, 2014. "Dots to dots: a general methodology to build local indicators using spatial micro-data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 245-272, August.
    18. Castellacci, Fulvio, 2010. "Firm heterogeneity, international cooperations and export participation," MPRA Paper 27585, University Library of Munich, Germany.
    19. Ari Kokko & Victoria Kravtsova, 2012. "Regional Characteristics And Effects Of Inward Fdi: The Case Of Ukraine," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 3(2).
    20. Altomonte, Carlo & Nicolini, Marcella, 2012. "Economic integration and the dynamics of firms’ competitive behavior," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 383-402.
    21. Juliette Milgram-Baleix, 2009. "Do Spanish firms learn from firms located nearby?," Economic Working Papers at Centro de Estudios Andaluces E2009/09, Centro de Estudios Andaluces.
    22. Bruno Merlevede & Victoria Purice, 2016. "Distance, time since foreign entry, and productivity spillovers from foreign direct investment," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 775-800, November.
    23. Carlo Altomonte & Marcella Nicolini & Armando Rungi & Laura Ogliari, 2010. "Assessing the Competitive Behaviour of Firms in the Single Market: A Micro-based Approach," European Economy - Economic Papers 2008 - 2015 409, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    24. Fazio, Giorgio & Piacentino, Davide, 2018. "Convergence analysis for hierarchical longitudinal data," Economic Modelling, Elsevier, vol. 73(C), pages 89-99.
    25. Jordaan, Jacob A., Douw, Willem, Qiang, Zhenwei, 2020. "Multinational Corporation Affiliates, Backward Linkages, and Productivity Spillovers in Developing and Emerging Economies : Evidence and Policy Making," Policy Research Working Paper Series 9364, The World Bank.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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