Globalisation and Technological Convergence in the EU

SERIES Working Paper No. 41

29 Pages Posted: 28 Jul 2012

See all articles by Camilla Mastromarco

Camilla Mastromarco

Dipartimento di Scienze dell'Economia - University of Salento (Lecce)

Laura Serlenga

Università degli Studi di Bari; Institute for the Study of Labor (IZA)

Yongcheol Shin

Independent

Date Written: March 1, 2012

Abstract

We employ a two-step approach in investigating the dynamic transmission channels under which globalization factors foster technical efficiency by combining a dynamic efficiency analysis in the stochastic frontier framework, and a time series approach based on VAR and spectral analysis. Using the dataset of the 18 EU countries over 1970-2004, we find that both import and FDI are significant factors in spreading efficiency externalities and thus accelerating technology catch-up in the EU. In particular, the impacts of the import are more prominent in the short-run while those of FDI play a more important role over the longer-run. Furthermore, the impacts of the import are pro-cyclical only in the short-run whereas those of FDI are pro-cyclical mostly over the medium- to the long-run. This evidence is broadly consistent with the sample observation that the recent slowdown of the EU productivity has been closely related to the corresponding FDI decline especially after 2000. Hence, any protection-oriented policy will be likely to be more detrimental for the EU.

Keywords: Stochastic Frontier in Heterogeneous Panels, Time-Varying Efficiency, Globalisation Factors, Unobserved Factors, Spectral and Impulse Response Analyses

JEL Classification: D24, O47, C13, C33

Suggested Citation

Mastromarco, Camilla and Serlenga, Laura and Shin, Yongcheol, Globalisation and Technological Convergence in the EU (March 1, 2012). SERIES Working Paper No. 41, Available at SSRN: https://ssrn.com/abstract=2118483 or http://dx.doi.org/10.2139/ssrn.2118483

Camilla Mastromarco (Contact Author)

Dipartimento di Scienze dell'Economia - University of Salento (Lecce) ( email )

Ecotekne
Strada per Monteroni
Lecce 73100
Italy

Laura Serlenga

Università degli Studi di Bari ( email )

Piazza Umberto I
Bari, 70121
Italy

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Yongcheol Shin

Independent

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