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THE QUALITY OF REGIONAL GOVERNMENT AND FIRM PERFORMANCE

Fernanda Ricotta ()

No 201606, Working Papers from Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF

Abstract: This paper examines the effect of the quality of regional government (QoG) on firm Total Factor Productivity (TFP) in a multi-country context. The analysis is based on comparable cross-country data of manufacturing firms operating in seven European countries (Austria, France, Germany, Hungary, Italy, Spain and the United Kingdom). The measure of the ‘quality of government’ is the European quality of government index (EQI), calculated at regional level over twenty-seven EU members. To disentangle internal from external productivity drivers, the multilevel approach is employed. Results refer to 2008 and show, as expected, the importance of firm-specific determinants of TFP. As far as the specific scope of this paper is concerned, firms located in regions with high quality regional government show higher levels of TFP. When considering the QoG components, corruption and the quality of services positively affect TFP, while the evidence is inconclusive for impartiality.

Keywords: Institutions; firm performance; European regions; multilevel model (search for similar items in EconPapers)
JEL-codes: O43 D24 C30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-eur, nep-geo and nep-sbm
Date: 2016-07
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http://www.ecostat.unical.it/RePEc/WorkingPapers/WP06_2016.pdf First version, 2016-07 (application/pdf)

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