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What are the drivers of total factor productivity in the European Union?

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

Abstract

This paper examines the evolution of total factor productivity (TFP) over time, as well as across countries and sectors, and investigates its determinants. To this end, a panel data set of 17 European Union (EU) countries and 13 sectors over the period 1995--2007 is used as part of a twofold approach. First, we estimate aggregate 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 technologies. Second, we investigate the relative importance of the drivers of predicted TFP using a dynamic ordinary least-squares estimator. The results indicate that rationalization, human capital and information and communication technologies are the main drivers of TFP.

Suggested Citation

  • Agnieszka Gehringer & Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann Danzinger, 2016. "What are the drivers of total factor productivity in the European Union?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(4), pages 406-434, June.
    • Handle: RePEc:taf:ecinnt:v:25:y:2016:i:4:p:406-434
    DOI: 10.1080/10438599.2015.1067007
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