EXPLAINING TFP AT FIRM LEVEL IN ITALY. DOES LOCATION MATTER?

Francesco Aiello (), Valeria Pupo () and Fernanda Ricotta

No 201202, Working Papers from Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF

Abstract: This study analyses how firms' internal variables and regional factors affect Total Factor Productivity (TFP) of Italian manufacturing firms. Due to the hierarchical structure of our data, we employ a multilevel model that allows for a clear distinction between firm and region-specific effects. Results refer to 2004-2006 and show, as expected, the importance of firm-specific determinants of TFP. At the same time, they indicate that location matters, in the sense that the context where firms operate plays a crucial role in determining the level of TFP. In more detail, we find that the regional endowment of infrastructure, the efficiency of local administration and the investments in R&D exert a positive effect on firms' performance. We also argue that regional gaps in the endowment of these factors help to understand the dualistic nature of the Italian economy, where a wealthy North coexists with a less developed South.

Keywords: Manufacturing Firms; Total Factor Productivity; Italian Regional Divide; Multilevel Models (search for similar items in EconPapers)
JEL-codes: C31 L60 R11 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-02
New Economics Papers: this item is included in nep-cse, nep-eff, nep-geo, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.ecostat.unical.it/RePEc/WorkingPapers/WP02_2012.pdf First version, 2012-02 (application/pdf)

Related works:
Working Paper: Explaining TFP at firm level in Italy. Does location matter? (2011)
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