Productivity Drivers: Empirical Evidence on the Role of Digital Capital, FDI and Integration

Amat Adarov, David Klenert, Robert Marschinski and Robert Stehrer

No JRC122068, JRC Research Reports from Joint Research Centre

Abstract: There are marked differences in productivity dynamics between countries as well as industries, often leading to substantial performance gaps, such as the gap in labour productivity between the EU and the US. In this article, we use the 2019 release of the EU KLEMS database to look into the drivers of productivity. In particular, we analyse how different types of capital (including intangible capital), foreign direct investment, integration into global value chains and EU integration affect labour productivity. Key findings are that intangible Information and Communication Technology (ICT) capital is a strong driver of productivity both at sectoral and aggregate levels, even more so than tangible ICT capital. Furthermore, backward global value chain integration and EU integration are positively associated with labour productivity. Contrary to expectations, we do not find evidence of a productivity-enhancing effect of foreign direct investment. Finally, we estimate by how much the productivity gap between the EU and the US could be reduced through different ICT investment policies.

Keywords: productivity; productivity gap; digitalisation; ICT capital; FDI; global value chains; intangible capital (search for similar items in EconPapers)
Pages: 53 pages
Date: 2020-10
New Economics Papers: this item is included in nep-eff, nep-eur, nep-ict, nep-int and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ipt:iptwpa:jrc122068

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