Productivity Differentiantion Along the Development Process: a "Meso" Approach

"Firms are different" and everyone knows it by direct experience: tendency toward a productivity differentiation is a consequence of the fact that, generally speaking, new goods and new processes are continuously introduced in the market. Nevertheless, imitation and firm selection tend to act as counter-balancing forces. It is possible to imagine that forces increasing firm differences (in term of productivity) act stronger in developing countries, and that, contemporaneously, the selection process is weaker in these same economies. Fragmentary empirical indications suggest that productivity differentiation among firms/sectors is effectively higher in poorer countries. This paper is a step to deep this question in more general terms: it proposes and empirically tests a "development" perspective to analyze productivity differentials, and this seems a substantial novelty. Results, with a few limits, support the hypothesis that inter-industry productivity differentials are negatively associated with the level of development.