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TFP convergence across European regions: a comparative spatial dynamics analysis

Author

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  • A. Di Liberto

    ()

  • S. Usai

    ()

Abstract

This paper proposes a fixed-effect panel methodology that enables us to simultaneously take into account both TFP and traditional neoclassical convergence. We analyse a sample of 199 regions in EU15 (plus Norway and Switzerland) between 1985 and 2006 and find the absence of an overall process of TFP convergence as we observe that TFP dispersion is virtually constant across the two sub-periods. This result is proved robust to the use of different estimation procedures such as simple LSDV , spatially corrected LSDV , Kiviet-corrected LSDV, and GMM Ã la Arellano and Bond. However, we also show that this absence of a strong process of global TFP convergence hides interesting dynamic patterns across regions. These patterns are revealed by the use of recent exploratory spatial data techniques that enable us to obtain a complete picture of the complex EU cross-regions dynamics. We find that, between 1985 and 2006, there has been numerous regional miracles and disasters in terms of TFP performance and that polarization patterns have significantly changed along time. Overall, results seem to suggest that a few TFP leaders are emerging and are distancing themselves from the rest, while the cluster of low TFP regions is increasing.

Suggested Citation

  • A. Di Liberto & S. Usai, 2010. "TFP convergence across European regions: a comparative spatial dynamics analysis," Working Paper CRENoS 201030, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  • Handle: RePEc:cns:cnscwp:201030
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    File URL: http://crenos.unica.it/crenos/node/3049
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    References listed on IDEAS

    as
    1. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August.
    2. Busom, Isabel & Fernández-Ribas, Andrea, 2008. "The impact of firm participation in R&D programmes on R&D partnerships," Research Policy, Elsevier, vol. 37(2), pages 240-257, March.
    3. LG Deidda & B. Fattouh, 2010. "Relationship Finance, Market Finance and Endogenous Business Cycles," Working Paper CRENoS 201008, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    4. Bonte, Werner & Keilbach, Max, 2005. "Concubinage or marriage? Informal and formal cooperations for innovation," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 279-302, April.
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    Citations

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    Cited by:

    1. Johanna Vogel, 2015. "The two faces of R&D and human capital: Evidence from Western European regions," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 525-551, August.
    2. Amjad Naveed & Nisar Ahmad, 2014. "Technology Spillovers and International Borders: A Spatial Econometric Analysis," Working Papers 2, University of Southern Denmark, Centre for Border Region Studies.

    More about this item

    Keywords

    tfp; technology catching up; panel data; exploratory spatial data analysis;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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