Regional Productivity Network in the EU

Camilla Mastromarco, Laura Serlenga and Yongcheol Shin

No 10404, CESifo Working Paper Series from CESifo

Abstract: We develop a unified stochastic frontier model which controls for the local spatial correlation and the global factor dependence as well as parameter heterogeneity, simultaneously. We then propose the regional productivity network analysis to examine the diffusion impacts of the capital intensity on the labour productivity in the EU. We apply the proposed approach to the dataset consisting of 202 regions in the EU15 countries over 1980-2019, and convincingly unveil that the technological shock diffuses from efficient regions operating on or near the frontier to inefficient regions. This suggests that policies to enhance domestic absorption capacity appear better suited to net receivers of technological shocks whilst policies to attract more R&D investments are appropriate to their transmitters. In this regard we stress the importance of investing European funds in peripheral regions to address regional inequality and polarisation.

Keywords: spatial stochastic frontier model with factors and heterogeneity; CCEX-IV estimator; regional productivity network analysis in the EU; efficiency clusters (search for similar items in EconPapers)
JEL-codes: C13 C33 D24 O47 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eec, nep-eff, nep-geo, nep-int, nep-net, nep-sbm and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10404

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