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Be productive or face decline. On the sources and determinants of output growth in Italian manufacturing firms

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Abstract

This article investigates the sources and determinants of output growth of Italian manufacturing firms. Applying stochastic frontier techniques, we decompose output growth into factor accumulation and TFP growth for the period 1998–2003. TFP growth is further decomposed into technological change, efficiency change and scale effects. Two key results emerge from the analysis. After confirming that both input accumulation and TFP growth are important in explaining output growth, we show that efficiency change (technological catch-up) is the most significant component of TFP growth in explaining output growth distribution. Furthermore, using a specific model of the asymmetric error component, we find that R&D spillovers, banking efficiency and public infrastructures have statistically significant and economically relevant effects on technological catch-up.

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Authors and Affiliations

  1. Dipartimento di Economia e Statistica, Università della Calabria, 87036, Arcavacata di Rende, CS, Italy

    Francesco Aiello

  2. Dipartimento di Scienze Economiche e Matematico-Statistiche, Università del Salento (Lecce), Centro ECOTEKNE, Via per Monteroni, 73100, Lecce, Italy

    Camilla Mastromarco

  3. Viale dell’Università, 4, 37129, Verona, Italy

    Angelo Zago

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  1. Francesco Aiello
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  2. Camilla Mastromarco
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  3. Angelo Zago
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Correspondence to Camilla Mastromarco.

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Aiello, F., Mastromarco, C. & Zago, A. Be productive or face decline. On the sources and determinants of output growth in Italian manufacturing firms. Empir Econ 41, 787–815 (2011). https://doi.org/10.1007/s00181-010-0405-4

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