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Regulation, Competition and Productivity Convergence

Listed author(s):
  • Paul Conway
  • Donato de Rosa
  • Giuseppe Nicoletti
  • Faye Steiner

This paper investigates the effect of product market regulations on the international diffusion of productivity shocks. The empirical results indicate that restrictive product market regulations slow the process of adjustment through which best practice production techniques diffuse across borders and new technologies are incorporated into the production process. This suggest that remaining cross-country differences in product market regulation can partially explain the recent observed divergence of productivity in OECD countries, given the emergence of new general-purpose technologies over the 1990s. The paper also investigates two channels through which product market regulations might affect the international diffusion of productivity shocks, namely the adoption of information and communications technology and the location decisions of multi-national enterprises. In both cases the effect of anticompetitive product market regulation is found to be negative and significant. Régulation, concurrence et convergence de la productivité Cette étude analyse les effets de la régulation dans les marchés des biens sur la diffusion des chocs de productivité au niveau international. Les résultats empiriques indiquent que les restrictions dans les marchés des biens ralentissent le processus d'ajustement à travers lequel les techniques de production les plus avancées se répandent au-delà des frontières et sont incorporées dans l'activité productive. Ces résultats suggèrent que les différentes approches dans la régulation des marchés des biens qui caractérisent encore les pays de l'OCDE peuvent expliquer en partie la tendance à la divergence des niveaux de productivité qui a été observée récemment dans la zone OCDE, étant donné l'émergence des nouvelles technologies de l'information et communication au cours de la même période. L'étude analyse aussi deux canaux par lesquels la régulation peut influencer la diffusion des chocs de productivité au niveau international : l'investissement en nouvelles technologies de l'information et communication et les décisions de localisation des filiales des entreprises multinationales. Dans les deux cas, les résultats suggèrent que l'effet des régulations qui font obstacle à la concurrence dans les marchés des biens est négatif et significatif.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 509.

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Date of creation: 04 Sep 2006
Handle: RePEc:oec:ecoaaa:509-en
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