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On modeling the determinants of TFP growth

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  • Mastromarco, Camilla
  • Zago, Angelo

Abstract

We investigate the determinants of TFP growth of Italian manufacturing firms. Using stochastic frontier techniques, we consider three approaches for taking into account the influence of external factors, i.e., the determinants or drivers of growth. First, in our novel approach external factors may influence the technological progress, that is the shift of the frontier. To model this possible unexplored effect, we extend the standard time trend model to make it a function of the external factors. Then, following more standard approaches, we model external factors as either influencing the distance from the frontier, i.e., inefficiency, or the shape of the technology. Using a sample of manufacturing firms in 1998–2003, we find that technological investments and spillovers, human capital and regional banking inefficiency all have a significant effect on TFP growth.

Suggested Citation

  • Mastromarco, Camilla & Zago, Angelo, 2012. "On modeling the determinants of TFP growth," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 373-382.
    • Handle: RePEc:eee:streco:v:23:y:2012:i:4:p:373-382
    DOI: 10.1016/j.strueco.2012.04.001
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    Cited by:

    1. Francesca Marino, 2013. "The Italian productivity slowdown in a Real Business Cycle perspective," SERIES 0046, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Apr 2013.
    2. Almas Heshmati & Masoomeh Rashidghalam, 2020. "Estimation of technical change and TFP growth based on observable technology shifters," Journal of Productivity Analysis, Springer, vol. 53(1), pages 21-36, February.
    3. Gong, Binlei, 2018. "Interstate competition in agriculture: Cheer or fear? Evidence from the United States and China," Food Policy, Elsevier, vol. 81(C), pages 37-47.
    4. Young Eun Kim & Norman V. Loayza, 2019. "Productivity Growth: Patterns and Determinants across the World," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 42(84), pages 36-93.
    5. Prakash, Navendu & Singh, Shveta & Sharma, Seema, 2021. "Technological diffusion, banking efficiency and Solow's paradox: A frontier-based parametric and non-parametric analysis," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 534-551.
    6. Francesca Marino, 2016. "The Italian productivity slowdown in a Real Business Cycle perspective," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(2), pages 171-193, June.
    7. Duc-Anh Le & Phu Nguyen-Van & Thi Kim Cuong Pham, 2016. "Public expenditure, growth and productivity of Vietnam’s provinces," Working Papers of BETA 2016-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    8. Sánchez Serrano, Antonio, 2022. "Loan renegotiation and the long-term impact on total factor productivity," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(4).
    9. Omer Yalcinkaya & Halil Ibrahim Aydin & Ismail Siriner, 2016. "Macroeconomic Determinants Of Total Factor Productivity: New Generation Panel Data Analysis On Oecd Countries (1996-2015)," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 4-16, December.
    10. Gong, Binlei, 2020. "Agricultural productivity convergence in China," China Economic Review, Elsevier, vol. 60(C).
    11. Khan, Muhammad Salar, 2022. "Absorptive capacities and economic growth in low- and middle-income economies," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 156-188.
    12. Edward Wei-Te Hsieh & Rajeev K. Goel, 2019. "Internet use and labor productivity growth: recent evidence from the U.S. and other OECD countries," Netnomics, Springer, vol. 20(2), pages 195-210, December.
    13. ADACHI Yusuke & OGAWA Hikaru & TSUBUKU Masafumi, 2019. "Productivity Dynamics during Major Crises in Japan: A Quantile Approach," Discussion papers 19015, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Total factor productivity; Stochastic frontiers; R&D spillovers; Banking inefficiency; Infrastructures;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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