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TECHNOLOGICAL CATCH-UP AND GEOGRAPHIC PROXIMITY

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Abstract:

ABSTRACT. 

This paper examines productivity catch-up as a source of establishment productivity growth. We present evidence that, other things equal, establishments further behind the industry frontier experience faster rates of productivity growth. Geographic proximity to frontier firms makes catch-up faster. Our econometric specification implies a long-run relationship between productivity levels, where nonfrontier establishments lie a steady-state distance behind the frontier such that their rate of productivity growth including catch-up equals productivity growth at the frontier. We use our econometric estimates to quantify the implied contribution to productivity growth of catch-up to both the national and regional productivity frontiers.

Document Type: Research Article

DOI: https://doi.org/10.1111/j.1467-9787.2009.00630.x

Affiliations: 1: Institute for Fiscal Studies and University College London, 7 Ridgmount Street, London WC1E 7AE, U.K., Email: rgriffith@ifs.org.uk 2: London School of Economics, Yale School of Management and Institute for Fiscal Studies, Houghton Street, London WC2A 2AE, U.K., Email: s.j.redding@lse.ac.uk 3: CMPO, University of Bristol and Institute for Fiscal Studies, 2 Priory Road, Bristol BS8 1TX, U.K., Email: helen.simpson@bristol.ac.uk

Publication date: 2009-10-01

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