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Spatial heterogeneity in factors misallocation: European evidence

Author

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  • Francesca Ghinami

    (Gran Sasso Science Institute)

Abstract

This study investigates the spatial heterogeneity that factors misallocation reveals in nine EU-member countries (Germany, France, Austria, Italy, Spain, Portugal, Czech Republic, Slovenia and Poland) during the years 2011-2020. Misallocation, as in the degree of efficiency with which inputs are allocated across firms, is increasingly regarded as one main source of aggregate productivity differences across countries. Nevertheless, its within-country spatial and regional dimensions are still largely overlooked, notwithstanding numerous reasons for allocative efficiency to vary across different administrative units. This article aims at filling this gap by firstly performing an exploratory analysis of allocative efficiencies at different levels of territorial aggregation (NUTS0-3). Secondly, it provides evidence for the across-regions disparities in allocative efficiency to account for large shares of aggregate misallocation for all the examined European countries. Finally, it investigates and finds support for the hypothesis that variations in local institutional quality may help explaining regional differences in allocative efficiencies

Suggested Citation

  • Francesca Ghinami, 2023. "Spatial heterogeneity in factors misallocation: European evidence," Discussion Paper series in Regional Science & Economic Geography 2023-06, Gran Sasso Science Institute, Social Sciences, revised Oct 2024.
    • Handle: RePEc:ahy:wpaper:wp43
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    File URL: https://www.gssi.it/images/discussion%20papers%20rseg/2023/DPRSEG_2023_06.pdf
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    More about this item

    Keywords

    Total factor productivity; Misallocation; Regional disparities; Institutional Quality;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • 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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