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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
Regulation, Competition and Productivity Convergence
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- Paul Conway, Donato de Rosa, Giuseppe Nicoletti1, Faye Steiner2
- Author Affiliations
- 1: OECD, France
- 2: Stanford University, United States
- 04 Sep 2006
- Bibliographic information
This paper investigates the effect of product market regulations on the international diffusion of productivity shocks. The empirical results indicate that restrictive product market regulations slow the process of adjustment through which best practice production techniques diffuse across borders and new technologies are incorporated into the production process. This suggest that remaining cross-country differences in product market regulation can partially explain the recent observed divergence of productivity in OECD countries, given the emergence of new general-purpose technologies over the 1990s. The paper also investigates two channels through which product market regulations might affect the international diffusion of productivity shocks, namely the adoption of information and communications technology and the location decisions of multi-national enterprises. In both cases the effect of anticompetitive product market regulation is found to be negative and significant.
- productivity convergence, information and communication technologies, panel data analysis, institutions and growth, foreign direct investment
- JEL Classification:
- C33: Mathematical and Quantitative Methods / Multiple or Simultaneous Equation Models; Multiple Variables / Panel Data Models; Spatio-temporal Models
- O11: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Macroeconomic Analyses of Economic Development
- O33: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Technological Change: Choices and Consequences; Diffusion Processes
- O40: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / General
- O47: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence