Scarpetta, StefanoTressel, Thierry2013-08-012013-08-012004-04https://hdl.handle.net/10986/14748The authors present empirical evidence on the determinants of industry-level multifactor productivity growth. They focus on "traditional factors," including the process of technological catch up, human capital, and research and development (R&D), as well as institutional factors affecting labor adjustment costs. Their analysis is based on harmonized data for 17 manufacturing industries in 18 industrial economies over the past two decades. The disaggregated analysis reveals that the process of technological convergence takes place mainly in low-tech industries, while in high-tech industries, country leaders tend to pull ahead of the others. The link between R&D activity and productivity also depends on technological characteristics of the industries: while there is no evidence of R&D boosting productivity in low-tech industries, the effect is strong in high-tech industries, but the technology leaders tend to enjoy higher returns on R&D expenditure compared with followers. There is also evidence in the data that high labor adjustment costs (proxied by the strictness of employment protection legislation) can have a strong negative impact on productivity. In particular, when institutional settings do not allow wages or internal training to offset high hiring and firing costs, the latter reduce incentives for innovation and adoption of new technologies, and lead to lower productivity performance. Albeit drawn from the experience of industrial countries, this result may have relevant implications for many developing economies characterized by low relative wage flexibility and high labor adjustment costs.en-USCC BY 3.0 IGOACCOUNTINGBASE YEARBUSINESS CYCLESCAPITAL STOCKCAPITAL-LABORCAPITAL-LABOR RATIOCLIMATECOMPARATIVE ADVANTAGECONSTANT RETURNSCONSTANT RETURNS TO SCALECONSUMERSCOUNTRY COMPARISONSDECREASING RETURNSDETERMINANTS OF GROWTHECONOMETRIC ANALYSISECONOMIC GROWTHECONOMIC PERFORMANCEECONOMIES OF SCALEECONOMISTSELASTICITYEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPLOYMENTEQUILIBRIUMEQUILIBRIUM LEVELEXPECTED RETURNSFACTORS OF PRODUCTIONGDPGDP PER CAPITAGROWTH LITERATUREGROWTH MODELGROWTH MODELSGROWTH PATHGROWTH PERFORMANCEGROWTH RATESHUMAN CAPITALHUMAN DEVELOPMENTINCENTIVES TO SAVEINCOMEINDUSTRIAL ECONOMIESINNOVATIONINVENTORYLABOR COSTSLABOR FORCELABOR INPUTLABOR PRODUCTIVITYLAWSLEGISLATIONMACROECONOMIC SHOCKSMARGINAL COSTMARGINAL COSTSMARGINAL PRODUCTMARKET POWEROLDER PEOPLEOVERLAPPING GENERATIONS MODELPENALTIESPERFECT COMPETITIONPOLICY MAKERSPRICE LEVELSPRODUCT DIFFERENTIATIONPRODUCT MARKETSPRODUCTION FUNCTIONPRODUCTION PROCESSPRODUCTION PROCESSESPRODUCTIVITYPRODUCTIVITY GROWTHPURCHASING POWERRELATIVE PRICESROLE OF INNOVATIONSAVINGSSHARE OF LABORSUNK COSTSTECHNICAL CHANGETECHNICAL PROGRESSTECHNOLOGICAL FACTORSTECHNOLOGICAL PROGRESSTECHNOLOGY ADOPTIONTIME SERIESTOTAL COSTSTRADE UNIONSWAGESWORKERS PRODUCTIVITY GROWTHINNOVATION IN BUSINESSTECHNOLOGICAL CHANGETECHNOLOGICAL INNOVATIONSLABOR MARKET NEXUSFACTOR PRODUCTIVITYHUMAN CAPITAL FORMATIONRESEARCH & DEVELOPMENTINSTITUTIONAL FRAMEWORKLABOR COSTSMANUFACTURING SECTORINDUSTRIALIZED SOCIETIESTECHNOLOGICAL CAPACITYRATE OF RETURNADJUSTMENT COSTSEMPLOYMENT POLICIESON THE JOB TRAININGWAGE CONTROLSWorld Bank10.1596/1813-9450-3273