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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