Knock-on effect of non-manufacturing regulation on manufacturing sectors efficiency and productivity

Fioramanti, Marco (2011): Knock-on effect of non-manufacturing regulation on manufacturing sectors efficiency and productivity.

Abstract

Since the mid of nineties European countries are registering an anemic growth of economic activity, in large part due to the dynamic of productivity. In 2010 the European Council adopted a new Agenda, Euro2020, which aim is to boost growth also improving European competitiveness. Regulation is one of the main factors influencing competitiveness. This paper focuses on the determinants of Total Factor Productivity (TFP) growth in 13 manufacturing sectors in a panel of 18 OECD countries from 1975 to 2007. Using the Stochastic Frontier Approach applied to the EU-KLEMS and OECD’s Regulation Impact Indicator database I found that, given the strong negative relationship between regulation and Technical Efficiency, which is one of the drivers of TFP, countries with still tight regulation in services could/should reduced it in order to improve their economic performance without detriment for public finances.

• Item Type: MPRA Paper
• Language: English
• Keywords: Total Factor Productivity, Technical Efficiency, Competition, Regulation, Stochastic Frontier.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; L - Industrial Organization > L5 - Regulation and Industrial Policy > L59 - Other

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