Total Factor Productivity, Intangible Assets and Spatial Dependence in the European Regions

Abstract

In the last decade there has been an upsurge of studies on international comparisons of Total Factor Productivity (TFP). The empirical evidence suggests that countries and regions differ not only in traditional factor endowments (labour and physical capital) but mainly in productivity and technology. Therefore, a crucial issue is the analysis of the determinants of such differences in the efficiency levels across economies. In this paper we try to assess these issues by pursuing a twofold aim. First, we derive a regression based measure of regional TFP which have the nice advantage of not imposing a priori restrictions on the inputs elasticities; this is done by estimating a Cobb-Douglas production function relationship for 199 European regions over the period , which includes the traditional inputs as well as a measure of spatial interdependences across regions. Secondly, we investigate the determinants of the TFP levels by analyzing the role played by intangible factors: human capital, social capital and technological capital. It turns out that a large part of TFP differences across the European regions are explained by the disparities in the endowments of such assets. This outcome indicates the importance of policy strategies which aim at increasing the level of knowledge and social capital as stressed by the Lisbon agenda. Estimation is carried out by applying the spatial 2SLS method and the SHAC estimator to account for both heteroskedasticity and spatial autocorrelation.

The Common Agricultural Policy and productivity gains in Romanian agriculture: is there any evidence of convergence to the Western European realities?

“…Our study shows that the fi nancial support did not lead to an improvement in the TFP of the Romanian agricultural sector. This is in line with earlier studies that explained the productivity gaps in the Eastern European countries by defi ciencies in intangible factors (human, social and technological capital) (Dettori et al, 2012). In addition, Bartelsman et al (2013) explain that there is a direct link between the endowments structure and the productivity, which is higher in the USA and Western European economies.…”

Regional economic development in Europe: the role of total factor productivity

“…TFP therefore captures better the overall sophistication of the production process. To the extent that TFP has been studied at the regional level (e.g., Capello & Lenzi, 2015;Dettori, Marrocu, & Paci, 2012;Marrocu, Paci, & Usai, 2013), it has been estimated indirectly by means of regression analyses that derive TFP as residuals from regressions of output levels on production inputs. This approach requires factor inputs and TFP to be orthogonal, an assumption which is unlikely to hold in practice due to complementarities between factor inputs and productivity.…”

Productivity clustering and growth in Central and Eastern Europe

“…Other authors have showed that knowledge, innovation, and the ability of countries to successfully adopt foreign technology could also explain the differences in productivity (Capello & Lenzi, 2013;Cuadros & Alguacil, 2014;Dettori, Marrocu, & Paci, 2012;Easterly & Levine, 2001;Paci & Marrocu, 2013). Table 3 displays the productivity convergence in the manufacturing sector.…”