IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa03p32.html
   My bibliography  Save this paper

The micro-level dynamics of regional productivity growth: The source of divergence in Finland

Author

Listed:
  • Petri Böckerman
  • Mika Maliranta

Abstract

Productivity growth of the Finnish regions in 13 manufacturing industries is decomposed into micro-level sources by using plant-level data from 1975 to 1999. There are substantial regional differences in the intensity of productivity-enhancing restructuring. Dynamic competition is more intensive in Southern Finland, where the productivity level is also high. In contrast, plants located in Eastern Finland are equipped with low-productivity technologies owing to persistently sluggish micro-level dynamics. Productivity dispersion between plants within industries is greatest in Southern Finland. We argue that intensive experimentation is a more reasonable interpretation of this finding than large static X-inefficiency in this high productivity region.

Suggested Citation

  • Petri Böckerman & Mika Maliranta, 2003. "The micro-level dynamics of regional productivity growth: The source of divergence in Finland," ERSA conference papers ersa03p32, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa03p32
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/32.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. McCann, Philip, 2001. "Urban and Regional Economics," OUP Catalogue, Oxford University Press, number 9780198776451.
    2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    3. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
    4. Böckerman, Petri, 2002. "Understanding Regional Productivity in a Nordic Welfare State: Does ICT Matter?," Discussion Papers 798, The Research Institute of the Finnish Economy.
    5. Kangasharju, Aki & Pekkala, Sari, 2001. "Regional Economic Repercussions of an Economic Crisis: A Sectoral Analysis," Discussion Papers 248, VATT Institute for Economic Research.
    6. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
    7. Philippe Martin, 2005. "The geography of inequalities in Europe," Post-Print hal-01020614, HAL.
    8. Martin Neil Baily & Eric J. Bartelsman & John Haltiwanger, 2001. "Labor Productivity: Structural Change And Cyclical Dynamics," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 420-433, August.
    9. Francisco Alcalá & Antonio Ciccone, 2004. "Trade and Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 613-646.
    10. Tor Jakob Klette & Samuel Kortum, 2004. "Innovating Firms and Aggregate Innovation," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 986-1018, October.
    11. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence [‘A model of growth through creative destruction’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(36), pages 9-72.
    12. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    13. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    14. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    15. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    16. Andrew B. Bernard, 2004. "Exporting and Productivity in the USA," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 343-357, Autumn.
    17. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    18. Stefano Scarpetta & Philip Hemmings & Thierry Tressel & Jaejoon Woo, 2002. "The Role of Policy and Institutions for Productivity and Firm Dynamics: Evidence from Micro and Industry Data," OECD Economics Department Working Papers 329, OECD Publishing.
    19. Martin Neil Baily & Robert M. Solow, 2001. "International Productivity Comparisons Built from the Firm Level," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 151-172, Summer.
    20. Jacques Mairesse & Elizabeth Kremp, 1993. "A look at productivity at the firm level in eight French service industries," Journal of Productivity Analysis, Springer, vol. 4(1), pages 211-234, June.
    21. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    22. repec:hal:spmain:info:hdl:2441/9283 is not listed on IDEAS
    23. Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1998. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521633574.
    24. Piekkola, Hannu, 2005. "Knowledge Capital as the Source of Growth," Discussion Papers 972, The Research Institute of the Finnish Economy.
    25. Kenneth I. Carlaw & Richard G. Lipsey, 2003. "Productivity, Technology and Economic Growth: What is the Relationship?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 457-495, July.
    26. Charles R. Hulten, 2001. "Total Factor Productivity: A Short Biography," NBER Chapters, in: New Developments in Productivity Analysis, pages 1-54, National Bureau of Economic Research, Inc.
    27. Richard E. Caves, 1992. "Industrial Efficiency in Six Nations," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031930, April.
    28. David Rigby & Jurgen Essletzbichler, 2000. "Impacts of Industry Mix, Technological Change, Selection and Plant Entry/Exit on Regional Productivity Growth," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 333-342.
    29. Kirsi Mukkala, 2004. "Agglomeration economies in the finnish manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2419-2427.
    30. Roberto Ezcurra & Carlos Gil & Pedro Pascual & Manuel Rapun, 2005. "Regional inequality in the European Union: Does industry mix matter?," Regional Studies, Taylor & Francis Journals, vol. 39(6), pages 679-697.
    31. Maliranta, Mika, . "Micro Level Dynamics of Productivity Growth. An Empirical Analysis of the Great Leap in Finnish Manufacturing Productivity in 1975-2000," ETLA A, The Research Institute of the Finnish Economy, number 38, June.
    32. Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
    33. Vickers, John, 1995. "Concepts of Competition," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 1-23, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mika Maliranta & Petri Rouvinen & Pekka Ylä-Anttila, 2010. "Finland’s Path to the Global Productivity Frontier through Creative Destruction," International Productivity Monitor, Centre for the Study of Living Standards, vol. 20, pages 68-84, Fall.
    2. Catherine Fuss & Angelos Theodorakopoulos, 2018. "Compositional Changes in Aggregate Productivity in an Era of Globalisation and Financial Crisis," Working Papers of VIVES - Research Centre for Regional Economics 627696, KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics.
    3. Mertens, Matthias & Mueller, Steffen, 2022. "The East-West German gap in revenue productivity:Just a tale of output prices?," Journal of Comparative Economics, Elsevier, vol. 50(3), pages 815-831.
    4. Kuosmanen, Natalia & Maczulskij, Terhi, 2022. "The Role of Firm Dynamics in the Green Transition: Carbon Productivity Decomposition in Finnish Manufacturing," ETLA Working Papers 99, The Research Institute of the Finnish Economy.
    5. Maliranta, Mika & Määttänen, Niku, 2013. "Allocation and industry productivity: Accounting for firm turnover," ETLA Working Papers 11, The Research Institute of the Finnish Economy.
    6. Tomi Kyyrä & Mika Maliranta, 2008. "The micro-level dynamics of declining labour share: lessons from the Finnish great leap ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 17(6), pages 1147-1172, December.
    7. Kuosmanen, Timo & Kuosmanen, Natalia, 2021. "Structural change decomposition of productivity without share weights," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 120-127.
    8. Tahir Mahmood & Eatzaz Ahmad, 2014. "Output growth and investment dynamics in Finland: a panel data analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 777-801, November.
    9. Maliranta, Mika, . "Micro Level Dynamics of Productivity Growth. An Empirical Analysis of the Great Leap in Finnish Manufacturing Productivity in 1975-2000," ETLA A, The Research Institute of the Finnish Economy, number 38, June.
    10. Davide Consoli & Francesco Vona & Toni Saarivirta, 2013. "Analysis of the Graduate Labour Market in Finland: Spatial Agglomeration and Skill--Job Match," Regional Studies, Taylor & Francis Journals, vol. 47(10), pages 1634-1652, November.
    11. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    12. Richard Harris, 2011. "Models Of Regional Growth: Past, Present And Future," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 913-951, December.
    13. Fornaro, Paolo, 2018. "Economic Dynamics and Changes in Values and Attitudes among Finnish Regions: A Descriptive Analysis," ETLA Reports 82, The Research Institute of the Finnish Economy.
    14. Kauhanen, Antti & Maliranta, Mika, 2012. "Micro-components of aggregate wage dynamics," ETLA Working Papers 1, The Research Institute of the Finnish Economy.
    15. Natalia Kuosmanen & Timo Kuosmanen, 2024. "Inter-industry and intra-industry switching as sources of productivity growth: structural change of Finland’s ICT industries," Journal of Productivity Analysis, Springer, vol. 61(2), pages 107-120, April.
    16. J. De Mulder & H. Godefroid, 2018. "Slowdown in productivity," Economic Review, National Bank of Belgium, issue iv, pages 51-66, december.
    17. Hyytinen, Ari & Maliranta, Mika, 2011. "Firm Lifecycles and External Restructuring," Discussion Papers 1253, The Research Institute of the Finnish Economy.
    18. repec:aly:journl:202215 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Böckerman, Petri & Maliranta, Mika, 2006. "The Micro-level Dynamics of Regional Productivity Growth: The Source of Divergence in Finland Revised," Discussion Papers 1038, The Research Institute of the Finnish Economy.
    2. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
    3. Michele Cincera, 2004. "Impact of market entry and exit on EU productivity and growth performance," ULB Institutional Repository 2013/921, ULB -- Universite Libre de Bruxelles.
    4. Schiantarelli, Fabio, 2005. "Product Market Regulation and Macroeconomic Performance: A Review of Cross Country Evidence," IZA Discussion Papers 1791, Institute of Labor Economics (IZA).
    5. J. David Brown & Gustavo A. Crespi & Leonardo Iacovone & Luca Marcolin, 2018. "Decomposing firm-level productivity growth and assessing its determinants: evidence from the Americas," The Journal of Technology Transfer, Springer, vol. 43(6), pages 1571-1606, December.
    6. Hyytinen, Ari & Maliranta, Mika, 2011. "Firm Lifecycles and External Restructuring," Discussion Papers 1253, The Research Institute of the Finnish Economy.
    7. Böckerman, Petri, 2002. "Understanding Regional Productivity in a Nordic Welfare State: Does ICT Matter?," Discussion Papers 798, The Research Institute of the Finnish Economy.
    8. Baldwin, John R. Beckstead, Desmond Brown, W. Mark Rigby, David, 2007. "Économies urbaines et productivité," Série de documents de recherche sur l'analyse économique (AE) 2007045f, Statistics Canada, Direction des études analytiques.
    9. Acemoglu, Daron & Cao, Dan, 2015. "Innovation by entrants and incumbents," Journal of Economic Theory, Elsevier, vol. 157(C), pages 255-294.
    10. Jose Asturias & Sewon Hur & Timothy J. Kehoe & Kim J. Ruhl, 2023. "Firm Entry and Exit and Aggregate Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(1), pages 48-105, January.
    11. Alessia Matano & Paolo Naticchioni, 2009. "Wage distribution and the spatial sorting of workers and firms," Working Papers - Dipartimento di Economia 8-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2009.
    12. Poschke, Markus, 2009. "Employment protection, firm selection, and growth," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1074-1085, November.
    13. Arimoto, Yutaka & Nakajima, Kentaro & Okazaki, Tetsuji, 2014. "Sources of productivity improvement in industrial clusters: The case of the prewar Japanese silk-reeling industry," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 27-41.
    14. Ricardo A. López & Jens Südekum, 2009. "Vertical Industry Relations, Spillovers, And Productivity: Evidence From Chilean Plants," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 721-747, October.
    15. Markus Poschke, 2010. "The Regulation of Entry and Aggregate Productivity," Economic Journal, Royal Economic Society, vol. 120(549), pages 1175-1200, December.
    16. Maliranta, Mika & Ilmakunnas, Pekka, 2005. "Decomposing productivity and wage effects of intra-establishment labor restructuring," Discussion Papers 993, The Research Institute of the Finnish Economy.
    17. Redha Fares, 2022. "Bankruptcy, Performance and Market Selection: Evidence from Firms in France," Erudite Ph.D Dissertations, Erudite, number ph22-01 edited by Claude Mathieu.
    18. Liu, Huju & Tang, Jianmin, 2017. "Age-productivity profiles of entrants and exits: evidence from Canadian manufacturing," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 26-36.
    19. Szirmai, Adam & Van Dijk, Michiel, 2007. "The Micro-Dynamics of Catch Up in Indonesian Paper Manufacturing: An International Comparison of Plant-Level Performance," MERIT Working Papers 2007-010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    20. Békés, Gábor & Harasztosi, Péter, 2013. "Agglomeration premium and trading activity of firms," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 51-64.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa03p32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.