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TFP estimation and productivity drivers in the European Union

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  • Gehringer, Agnieszka
  • Martínez-Zarzoso, Inmaculada
  • Nowak-Lehmann Danzinger, Felicitas

Abstract

This paper examines the development and drivers of total factor productivity (TFP) in the manufacturing sector for a panel of 17 EU countries over the period of 1995-2007. Recent panel data estimation techniques are used in a twofold approach. First, we estimate aggregated and sectoral TFP for 17 EU countries by means of the augmented mean group estimator to control for endogeneity, cross-section dependence and heterogeneous production technology. Second, we investigate the relative importance of the drivers of predicted TFP, namely Foreign Direct Investment (FDI), investment in Information and Communication Technologies (ICT), human capital, R&D, trade openness and rationalization efforts. The results confirm that rationalization, human capital and ICT are the main drivers of TFP.

Suggested Citation

  • Gehringer, Agnieszka & Martínez-Zarzoso, Inmaculada & Nowak-Lehmann Danzinger, Felicitas, 2014. "TFP estimation and productivity drivers in the European Union," Center for European, Governance and Economic Development Research Discussion Papers 189, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:189
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    File URL: https://www.econstor.eu/bitstream/10419/92935/1/778812839.pdf
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    References listed on IDEAS

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    1. Antonelli, Cristiano & Gehringer, Agnieszka, 2015. "Knowledge externalities and demand pull: The European evidence," Economic Systems, Elsevier, vol. 39(4), pages 608-631.
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    Cited by:

    1. Adam P. Balcerzak & Michał Bernard Pietrzak, 2016. "Quality Of Institutions And Total Factor Productivity In The European Union," Statistics in Transition. New Series, Polish Statistical Association, vol. 17(3), pages 497-514, September.
    2. Michal Bernard Pietrzak & Adam P. Balcerzak, 2016. "Quality of Human Capital and Total Factor Productivity in New European Union Members States," Working Papers 23/2016, Institute of Economic Research, revised May 2016.
    3. Adam P. Balcerzak & Michal Bernard Pietrzak, 2016. "Dynamic Panel Analysis of Influence of Quality of Human Capital on Total Factor Productivity in Old European Union Countries," Working Papers 19/2016, Institute of Economic Research, revised May 2016.

    More about this item

    Keywords

    sectoral TFP; heterogeneous production functions; common dynamic process; European Union;

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • 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

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