Regulation, Competition and Productivity Convergence

52 Pages Posted: 12 Sep 2006

See all articles by Paul Conway

Paul Conway

OECD

Donato De Rosa

World Bank

Giuseppe Nicoletti

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Faye Steiner

University of Paris I Pantheon-Sorbonne - CES Team

Date Written: September 2006

Abstract

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 anti-competitive product market regulation is found to be negative and significant.

Keywords: Productivity convergence, Institutions and growth , Information and communication technologies, Foreign direct investment, Panel data analysis

JEL Classification: O11, O33, O40, O47, C33

Suggested Citation

Conway, Paul and De Rosa, Donato and Nicoletti, Giuseppe and Steiner, Faye, Regulation, Competition and Productivity Convergence (September 2006). OECD Economics Department Working Paper No.509 , Available at SSRN: https://ssrn.com/abstract=929677 or http://dx.doi.org/10.2139/ssrn.929677

Paul Conway

OECD ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

HOME PAGE: http://www.oecd.org

Donato De Rosa

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Giuseppe Nicoletti (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33 1 4524 8730 (Phone)
+33 1 4524 1347 (Fax)

Faye Steiner

University of Paris I Pantheon-Sorbonne - CES Team ( email )

12, place du Panthéon
Paris, IL
France
+33 (0) 1 44 07 82 69 (Phone)

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