Productivity Growth in Europe

43 Pages Posted: 20 Apr 2016

Date Written: May 1, 2013

Abstract

This paper tests whether structural or firm-specific characteristics contributed more to (labor) productivity growth in the European Union between 2003 and 2008. It combines the Amadeus firm-level data on productivity and firm characteristics with country-level data describing regulatory environments from the World Bank's Doing Business surveys, foreign direct investment data from Eurostat, infrastructure quality assessments from the Global Competitiveness Report, and credit availability from the World Development Indicators. It finds that among the 12 newest members of the European Union, country characteristics are most important for firm productivity growth, particularly the stock of inward foreign direct investment and the availability of credit. By contrast, among the more developed 15 elder European Union member countries, firm-level characteristics, such as industry, size, and international affiliation, are most important for growth. The quality of the regulatory environment, measured by Doing Business indicators, is importantly correlated with productivity growth in all cases. This finding suggests that European Union nations can realize significant benefits from improving regulations and encouraging inward and outward foreign direct investment.

Keywords: E-Business, Economic Theory & Research, Environmental Economics & Policies, Banks & Banking Reform, Microfinance

Suggested Citation

Dall'Olio, Andrea and Iootty, Mariana and Kaneira, Naoto and Saliola, Federica, Productivity Growth in Europe (May 1, 2013). World Bank Policy Research Working Paper No. 6425. Available at SSRN: https://ssrn.com/abstract=2257195

Andrea Dall'Olio (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Mariana Iootty

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Naoto Kaneira

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Federica Saliola

World Bank

1818 H Street, NW
Washington, DC 20433
United States

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