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Firm Heterogeneity and Endogenous Regional Disparities

  • Carlo Altomonte
  • Italo Colantone

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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File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp161.pdf
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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 16105.

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Length: 36 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:lic:licosd:16105
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