TFP estimation and productivity drivers in the European Union

Agnieszka Gehringer (), Inmaculada Martínez-Zarzoso and Felicitas Nowak-Lehmann Danzinger

No 189, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: This paper examines the development and drivers of total factor productivity (TFP) in the manufacturing sector for a panel of 17 EU countries over the period of 1995-2007. Recent panel data estimation techniques are used in a twofold approach. First, we estimate aggregated and sectoral TFP for 17 EU countries by means of the augmented mean group estimator to control for endogeneity, cross-section dependence and heterogeneous production technology. Second, we investigate the relative importance of the drivers of predicted TFP, namely Foreign Direct Investment (FDI), investment in Information and Communication Technologies (ICT), human capital, R&D, trade openness and rationalization efforts. The results confirm that rationalization, human capital and ICT are the main drivers of TFP.

Keywords: sectoral TFP; heterogeneous production functions; common dynamic process; European Union (search for similar items in EconPapers)
JEL-codes: C26 F43 O47 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-eec, nep-eff, nep-gro, nep-ino, nep-opm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:189

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