The Micro-Level Dynamics of Regional Productivity Growth: The Source of Divergence in Finland
Posted: 6 Feb 2007
Despite a rapidly expanding theoretical and empirical literature emphasising the role of incessant intra-industry restructuring in productivity growth, few studies have gone beyond the framework of the representative firm in examining convergence or divergence in regional productivity. We use unique longitudinal plant-level data over a long period of time and apply a useful variant of productivity decomposition methods to study differences in productivity-enhancing restructuring within manufacturing industries among Finnish regions. Long-lasting differences in industry productivity growth between Southern and Eastern Finland can be attributed to the "creative destruction" components of productivity growth, mainly to the between and entry components.
Keywords: Productivity, Efficiency, Micro-level restructuring, Convergence, Divergence
JEL Classification: O12, R11
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