Trade, Regulation and Firm-Level Productivity in the OECD (original) (raw)
Related papers
Regulation, productivity and growth: OECD evidence
Economic Policy, 2003
Nicoletti and Scarpetta look at differences in the scope hinder the n--rtion of existing technologies, possibly by and depth of pro-competitive regulatory reforms and reducing cunipetitive pressures, technology spillovers, or privatization policies as a possible source of cross-the entry of new high-technology firms. At the same country dispersion in growth ouf , I es They suggest time, both privatization and entry liberalization are that, despite extensive liberalization and privatization in estimated to have a positive impact on productivity in all the OECD area, the cross-country variation of regulatory sectors. settings has increased in recent years, lining up with the These results offer an interpretation to the observed increasing dispersion in growth. The authors then recent differences in growth patterns across OECD investigate empirically the regulation-growth link using countries, in particular between large continental data that cover a large set of manufacturing and service European economies and the United States. Strict industries in OECD countries over the past two decades product market regulations-and lack of regulatory and focusing on multifactor productivity (MFP), which reforms-are likely to underlie the relatively poorer plays a crucial role in GDP growth and accounts for a productivity performance of some European countries, significant share of its cross-country variance. Regressing especially in those industries where Europe has MFP on both economywide indicators of regulation and accumulated a technology gap (such as information and privatization and industry-level indicators of entry communication technology-related industries). These liberalization, the authors find evidence that reforms results also offer useful insights for non-OECD countries. promoting private governance and competition (where In particular, they point to the potential benefits of these are viable) tend to boost productivity. In regulatory reforms and privatization, especially in those manufacturing the gains to be expected from lower entry countries with large technology gaps and strict regulatory barriers are greater the further a given country is from settings that curb incentives to adopt new technologies. the technology leader. So, regulation limiting entry may We thank Richard Baldwin and two anonymous referees for their valuable comments and Thierry Tressel for his significant contnbution to the construction of the industry-level database and the econometric anal) sis of productivity.
Regulation, Productivity and Growth
OECD Economics Department Working Papers, 2003
In this paper, we relate the scope and depth of regulatory reforms to growth outcomes in OECD countries. By means of a new set of quantitative indicators of regulation, we show that the crosscountry variation of regulatory settings has increased in recent years, despite extensive liberalisation and privatisation in the OECD area. We then look at the regulation-growth linkage using data that cover a large set of manufacturing and service industries over the past two decades. We focus on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its crosscountry variance. We find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. Both privatisation and entry liberalisation are estimated to have a positive impact on productivity. In manufacturing the gains are greater the further a given country is from the technology leader, suggesting that regulation limiting entry may hinder the adoption of existing technologies, possibly by reducing competitive pressures, technology spillovers, or the entry of new high-tech firms. These results offer an interpretation to the observed recent differences in growth patterns across OECD countries, in particular between large Continental European economies and the United States. Strict product market regulationsand lack of regulatory reforms-are likely to underlie the relatively poorer productivity performance of some European countries, especially in those industries where Europe has accumulated a technology gap (e.g. ICT-related industries).
Trade Policy and Productivity Growth in OECD Manufacturing*
International Economic Journal, 2001
Trade liberalization may promote economic growth in a number of ways, including by accelerating the rate of technological change. Firms that face more intense import competition may be spurred to greater rates of innovation; firms which export may absorb new technologies through their contact with international markets. This paper examines evidence on trade policy and productivity growth for a sample of thirteen OECD countries and including eighteen manufacturing sectors, using data primarily from the 1980s. Within individual sectors, there are strong productivity convergence effects within the OECD. After controlling for convergence, we find a positive association between high rates of productivity growth and low tariffs, and between high productivity growth and strong export performance. We found no particular association between high productivity growth and import penetration. The results are consistent with the possibility of positive linkages between trade liberalization and accelerated productivity growth. [F1, O4]
Regulation, Allocative Efficiency and Productivity in OECD Countries
OECD Economics Department Working Papers, 2008
This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised crosscountry firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets.
Trade barriers and productivity growth: cross-industry evidence
XXVII Encontro Nacional de Economia, pp43-59, 1999
This article investigates the impact of trade protection on the evolution of labor productivity and total factor productivity (TFP) of the Brazilian manufacturing sector. An annual panel-dataset of 16 industries for the years 1985 through 1997, a period that includes a major trade liberalization, was used. The regressions reported here are robust to openness indicator (nominal tari®s and e®ective protection rate were used), control variables and time period and suggest that barriers to trade negatively a®ects productivity growth at industry level: those sectors with lower barriers experienced higher growth. We were also able to link the observed increase of industry productivity growth after 1991 to the widespread reduction on e®ective protection experienced in the country in the nineties.
2010
Based on an endogenous growth model, we show that intermediate goods markets imperfections can curb incentives to improve productivity downstream. We confirm such prediction by estimating a model of multifactor productivity growth in which the effects of upstream competition vary with distance to frontier on a panel of 15 OECD countries and 20 sectors over 1985-2007. Competitive pressures are proxied with sectoral product market regulation data. We find evidence that anticompetitive upstream regulations have curbed MFP growth over the past 15 years, more strongly so for observations that are close to the productivity frontier.
Does FDI increase productivity? The role of regulation in upstream industries
The World Economy, 2018
In view of substantial changes having taken place in the regulatory environment and in light of the increasing role of inter industry linkages, we examine if the total factor productivity (TFP) growth impact of foreign direct investment (FDI) is determined by regulation in upstream sectors. Econometric estimates illustrate that FDI exerts a positive impact on growth of OECD industries Accepted Article This article is protected by copyright. All rights reserved. which slows down as upstream regulation rises. To raise the reliability of our estimates, we use instruments for FDI and regulation that are as free as possible of endogenous association with TFP growth. Our instrumental variable estimates verify that the influence of FDI on TFP growth depends negatively on the level of upstream regulation. Non parametric estimates confirm that the highest impact of FDI takes place at the lowest levels of entry regulation and public ownership.
Regulation, Competition and Productivity Convergence
SSRN Electronic Journal, 2000
This paper investigates the effect of product market regulations on the international diffusion of productivity shocks. The empirical results indicate that restrictive product market regulation slows the process of adjustment through which best practice production techniques diffuse across borders and new technologies are incorporated into the production process. Given differences in the stance of product market regulation across countries, the cross-country dispersion of productivity levels is found to increase in the wake of positive shocks to the world productivity frontier. These results suggest that the emergence of new general-purpose technologies over the 1990s could partially explain the observed divergence in productivity trends in OECD countries, despite a degree of recent cross-country convergence in product market regulation. The paper also investigates different channels through which anticompetitive regulations might affect a country's overall productivity performance. These include the influence of anti-competitive regulation on the adoption of information and communications technology, the entry rates of new firms, and the location decisions of multi-national enterprises.
Market Regulations, Prices, and Productivity
American Economic Review, 2016
This study is, to our knowledge, the first attempt to infer the consequences on productivity entailed by anticompetitive regulations in product and labor markets through their impacts on production prices and wages. Results show that changes in production prices and wages at country*industry levels are informative about the creation of rents impeding productivity in different ways and to different extents. A simulation based on OECD regulation indicators suggests that nearly all countries could expect sizeable gains in multifactor productivity from the implementation of large structural reform programs changing anticompetitive regulation practices on product and labor markets.