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The determinants of firms’ convergence to the European TFP frontier

Author

Listed:
  • Dolores Añón Higón

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

  • Juan A. Mañez

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

  • María E. Rochina-Barrachina

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

  • Amparo Sanchis

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

  • Juan A. Sanchis-Llopis

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

Abstract

In this article we characterize Total Factor Productivity (TFP) frontier firms at the industry level within the European Union during the period 2003-2014, and explore the determinants of the firms’ distance to the frontier. We find that larger, more capital-intensive, and more labour skilled firms are closer to the productivity frontier. In contrast, older firms are further away from the frontier. In addition, we obtain that a number of countries' economic and institutional factors, such as tertiary education, trade openness, easiness in getting credit and governance quality, all positively affect the catching up of laggards towards the productivity frontier. We also examine the moderating effect of the Great Recession on these determinants and obtain differentiated patterns.

Suggested Citation

  • Dolores Añón Higón & Juan A. Mañez & María E. Rochina-Barrachina & Amparo Sanchis & Juan A. Sanchis-Llopis, 2017. "The determinants of firms’ convergence to the European TFP frontier," Working Papers 1707, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1707
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    More about this item

    Keywords

    TFP; frontier firms; laggard firms; Great Recession; European Union countries;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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