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Regional productivity growth in the EU since 2000: something is better than nothing

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Abstract

This paper examines productivity growth across NUTS 2-regions in the EU during the period in which the Lisbon Strategy was rolled out (period 2000–2011). A robust nonparametric production frontier estimation technique is used to estimate and decompose regional productivity growth. Results show that in spite of the increased focus on improving competitiveness and productivity in European programs such as the Lisbon Agenda, regional productivity growth has been relatively limited for the whole EU. However, behind the modest average regional growth rate, there are high interregional differences in growth rates. Results also show evidence of a limited convergence trend in the EU-region since 2000.

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Notes

  1. Broadly speaking, the economic literature distinguishes between two types of convergence: \(\upbeta \)-convergence and \(\upsigma \)-convergence. \(\upbeta \)-convergence refers to the process by which economies that were initially lagging in terms of productivity are growing faster and catching-up with economies that were already performing strongly. \(\upsigma \)-convergence takes place when the dispersion in the productivity levels across economies is decreasing over time (for more on the types of convergence, see e.g. Durlauf and Quah 1999).

  2. A parametric production frontier technique that has been employed in the estimation of TFP-growth is the Stochastic Frontier Analysis (see, e.g. Kumbhakar and Wang 2005; Kumbhakar and Sun 2012). For a detailed comparison of parametric and nonparametric production frontier estimation techniques, see Hjalmarsson et al. (1996).

  3. Note that earlier studies that examine regional economic growth and convergence in the USA (e.g. across US states) also mostly use parametric techniques (e.g. Christopoulos and Tsionas 2007; Drivas et al. 2017; Tsionas 2000, 2001).

  4. The productivity growth rates and the quadripartite decomposition computed for the individual NUTS 2-regions are available from the author upon request.

  5. Testing the relative contributions of the components for changes in the sequence in which the components are added indicates that the test results are not sensitive to the sequence.

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  1. Research Group ECON-CEDON, Faculty of Economics and Business, Katholieke Universiteit Leuven (KU Leuven), Warmoesberg 26, 1000, Brussels, Belgium

    Nicky Rogge

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  1. Nicky Rogge
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Rogge, N. Regional productivity growth in the EU since 2000: something is better than nothing. Empir Econ 56, 423–444 (2019). https://doi.org/10.1007/s00181-017-1366-7

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  • DOI: https://doi.org/10.1007/s00181-017-1366-7

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