Working Paper: CEPR ID: DP1867
Authors: Paul A. Geroski; Ian Small; Chris F. Walters
Abstract: This paper examines some of the determinants of total factor productivity growth using a sample of 216 large UK firms observed over the period 1974?90, and then using three further samples which were used to check the robustness of the results. The main focus of the paper is on identifying the size of agglomeration economies and technology spillovers between firms. Both types of externality should drive the productivity growth rates of individual firms together (and, in the second case, link them to the incidence of innovation). The overwhelming feature of the data, however, is that productivity growth rates, at the level of the firm, are very idiosyncratic. Not only are they extremely hard to predict using their own history, but they are also very difficult to predict using information on the productivity growth or innovative activity of their rivals. We conclude that agglomeration economies and technological spillovers are, at best, of very modest size.
Keywords: agglomeration economies; technology spillovers; productivity growth
JEL Codes: L2; L7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Agglomeration economies (R11) | Productivity growth (O49) |
| Technology spillovers (O39) | Innovative outputs (O36) |
| Agglomeration economies (R11) | Correlation in productivity growth across firms (O47) |
| Technology spillovers (O39) | Correlation between innovative outputs of firms (O36) |