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Technical Change and Total Factor Productivity Growth for Swedish Manufacturing and Service Industries

  • Oh, Donghyun

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Heshmati, Almas

    ()

    (Seoul National University, Seoul, Korea)

  • Lööf, Hans

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

This paper presents alternative specifications of the production functions of a large panel of Swedish firms for the period 1992-2000. The period can be characterized as a transition when long-run productivity growth in the Swedish economy improved from being among the weakest to one of the strongest within the OECD. In order to present a detailed exploration of this dramatic change, the time trend and general index models are applied to estimate total factor productivity (TFP) growth, rate of technical change and returns to scale. The models are extended to allow for firm-specific as well as time-varying technical change. The parametric TFP measures are also compared with the non-parametric Solow residual, and several hypotheses are tested to explain the growth patterns in the Swedish economy. It is found that the improved growth rate, initially starting in large exporting manufacturing firms, after a deep economic crisis at the beginning of the 1990s, spilled over to the rest of the economy, both manufacturing and services.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 193.

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Length: 32 pages
Date of creation: 28 Sep 2009
Date of revision:
Handle: RePEc:hhs:cesisp:0193
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/

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