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Determinants of Productivity Gap in the European Union: A Multilevel Perspective

Author

Listed:
  • Bruno, Randolph Luca

    (University College London)

  • Douarin, Elodie

    (University College London)

  • Korosteleva, Julia

    (University College London)

  • Radosevic, Slavo

    (University College London)

Abstract
The paper explores the determinants of productivity gap within the European Union in four industrial manufacturing sectors (computers, chemicals, basic metals and food) of strong macroeconomic significance and varied 'Research and Development' (R&D) intensity. Our analysis reveals that some of the most important factors determining productivity gap across the EU are related to technology gap variables - R&D intensity and R&D embedded in purchased equipment and machinery - and how they interact. While the signs for both R&D and embedded R&D are as expected and our results emphasise the relevance of technology for closing the productivity gap, this is not the case with the interaction between these two variables. The estimates for the interaction terms are indeed very significant and consistently negative in three out of four sectors. This negative relationship suggests that there is no complementarity between these two modes of technology acquisition - R&D and embedded R&D investments - which are however each separately crucial for catching up. In policy terms, this situation suggests that there is a lack of coordination between R&D policy and technology transfer (FDI, trade and industrial policy). Given that, our results also show a widening productivity gap between the countries of the EU periphery (South and East) and the rest of the sample.

Suggested Citation

  • Bruno, Randolph Luca & Douarin, Elodie & Korosteleva, Julia & Radosevic, Slavo, 2019. "Determinants of Productivity Gap in the European Union: A Multilevel Perspective," IZA Discussion Papers 12542, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12542
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    2. Shahnazi, Rouhollah, 2021. "Do information and communications technology spillovers affect labor productivity?," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 342-359.
    3. Jaan Masso & Amaresh K Tiwari, 2021. "Productivity Implications Of R&D, Innovation And Capital Accumulation For Incumbents And Entrants: The Case Of Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 130, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    4. awel Dobrzanski & Sebastian Bobowski, 2021. "Structural and Productivity Changes in the European Countries During COVID-19 Pandemic," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 872-882.
    5. Julian Ramajo & Miguel A. Marquez & Geoffrey J. D. Hewings, 2021. "Addressing spatial dependence in technical efficiency estimation: A Spatial DEA frontier approach," Papers 2103.14063, arXiv.org.
    6. Thum-Thysen, Anna & Voigt, Peter & Weiss, Christoph, 2021. "Complementarities in capital formation and production: Tangible and intangible assets across Europe," EIB Working Papers 2021/12, European Investment Bank (EIB).
    7. Jaan Masso & Amaresh K Tiwari, 2022. "Productivity Implications of R&D, Innovation, and Capital Accumulation for Incumbents and Entrants: Perspectives from a Catching-up Economy," Papers 2205.10540, arXiv.org.
    8. Thiago Caliari & Philipe Scherer Mendes & Márcia Rapini & Camila Tolentino, 2021. "Technological Cumulativeness and Innovation in Brazilian Manufacturing Industry: Evidences from Brazilian Innovation Surveys 2008, 2011, and 2014," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 876-898, June.

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    More about this item

    Keywords

    multilevel analysis; technology gap; productivity; European Union;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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