IDEAS home Printed from https://ideas.repec.org/a/sls/ipmsls/v15y20071.html
   My bibliography  Save this article

Product Market Regulation and Productivity Convergence: OECD Evidence and Implications for Canada

Author

Listed:
  • Paul Conway
  • Giuseppe Nicoletti

Abstract

In this article we investigate the effect of product market regulation on the international diffusion of productivity shocks. The results indicate that regulations that restrict competition slow the process of adjustment through which best practice production techniques diffuse across borders and new technologies are incorporated into the production process. This effect is reflected in cross-country differences in ICT investment and speeds of catch up of sectoral productivity, which are significantly influenced by differences in product market regulation. Thus, persisting cross-country differences in product market regulation can partially explain the recent observed divergence of labour productivity in OECD countries, given the emergence of new general purpose technologies over the 1990s. In the case of Canada, the results suggest that remaining regulatory barriers to competition in a few key non-manufacturing sectors may have prevented the economy from benefiting to the full extent from high productivity growth rates in the United States and other productivity leaders.

Suggested Citation

  • Paul Conway & Giuseppe Nicoletti, 2007. "Product Market Regulation and Productivity Convergence: OECD Evidence and Implications for Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 15, pages 3-24, Fall.
  • Handle: RePEc:sls:ipmsls:v:15:y:2007:1
    as

    Download full text from publisher

    File URL: http://www.csls.ca/ipm/15/IPM-15-conway-e.pdf
    Download Restriction: no

    File URL: http://www.csls.ca/ipm/15/IPM-15-conway-f.pdf
    File Function: version en français
    Download Restriction: no

    References listed on IDEAS

    as
    1. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
    2. Maria Maher & Jay Shaffer, 2005. "Product Market Competition and Economic Performance in Canada," OECD Economics Department Working Papers 421, OECD Publishing.
    3. Dominique Guellec & Bruno van Pottelsberghe de la Potterie, 2003. "R&D and Productivity Growth: Panel Data Analysis of 16 OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 103-126.
    4. Rachel Griffith & Rupert Harrison & Helen Simpson, 2010. "Product Market Reform and Innovation in the EU," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 389-415, June.
    5. Alberto Alesina & Silvia Ardagna & Giuseppe Nicoletti & Fabio Schiantarelli, 2005. "Regulation And Investment," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 791-825, June.
    6. Nicholas Crafts, 2006. "Regulation and Productivity Performance," Oxford Review of Economic Policy, Oxford University Press, vol. 22(2), pages 186-202, Summer.
    7. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, March.
    8. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    9. Jean-Philippe Cotis, 2006. "Benchmarking Canada's Economic Performance," International Productivity Monitor, Centre for the Study of Living Standards, vol. 13, pages 3-20, Fall.
    10. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 9-72, April.
    11. Gust, Christopher & Marquez, Jaime, 2004. "International comparisons of productivity growth: the role of information technology and regulatory practices," Labour Economics, Elsevier, vol. 11(1), pages 33-58, February.
    12. Baldwin, John R. & Maynard, Jean-Pierre & Wong, Fanny, 2005. "The Output Gap Between Canada and the United States: The Role of Productivity (1994-2002)," Insights on the Canadian Economy 2005009e, Statistics Canada, Economic Analysis Division.
    13. Paul Conway & Giuseppe Nicoletti, 2006. "Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights," OECD Economics Department Working Papers 530, OECD Publishing.
    14. Paul Conway & Donato de Rosa & Giuseppe Nicoletti & Faye Steiner, 2006. "Regulation, Competition and Productivity Convergence," OECD Economics Department Working Papers 509, OECD Publishing.
    15. Nickell, Stephen & Nicolitsas, Daphne & Dryden, Neil, 1997. "What makes firms perform well?," European Economic Review, Elsevier, vol. 41(3-5), pages 783-796, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kevin J. Fox & Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2017. "Upstream Product Market Regulations, ICT, R&D and Productivity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 68-89, February.
    2. Delphine Irac & Jimmy Lopez, 2015. "Euro area structural convergence? A multi-criterion cluster analysis," International Economics, CEPII research center, issue 143, pages 1-22.
    3. Michael Schmidthaler & Jed Cohen & Johannes Reichl & Stefan Schmidinger, 2015. "The effects of network regulation on electricity supply security: a European analysis," Journal of Regulatory Economics, Springer, vol. 48(3), pages 285-316, December.
    4. Christine Carmody, 2013. "Slowing Productivity Growth - A developed economy," Economic Roundup, The Treasury, Australian Government, issue 2, pages 57-78, December.
    5. Dan Andrews & Chiara Criscuolo & Peter Gal & Carlo Menon, 2015. "Firm Dynamics and Public Policy: Evidence from OECD Countries," RBA Annual Conference Volume,in: Angus Moore & John Simon (ed.), Small Business Conditions and Finance Reserve Bank of Australia.
    6. Nicholas Crafts, 2013. "Returning to Growth: Policy Lessons from History," Fiscal Studies, Institute for Fiscal Studies, vol. 34(2), pages 255-282, June.
    7. Reuven Brenner & Gabrielle A. Brenner, 2010. "Venture Capital in Canada: Lessons for Building (or Restoring) National Wealth," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 86-98.
    8. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Product and Labour Market Regulations, Production Prices, Wages and Productivity," Review of Economics and Institutions, Università di Perugia, vol. 7(2).
    9. Peter Jarrett, 2012. "The Long-term Outlook for Productivity and Per Capita Income Growth for Canada: A Comparison with Selected G-20 Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 85-96, Fall.

    More about this item

    Keywords

    product market regulation; OECD countries; cross-country differences; sectoral productivity; reform.;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sls:ipmsls:v:15:y:2007:1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CSLS). General contact details of provider: http://edirc.repec.org/data/cslssca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.