Distance to Which Frontier? Evidence on Productivity Convergence from International Firm-Level Data

41 Pages Posted: 18 Dec 2008

See all articles by Eric J. Bartelsman

Eric J. Bartelsman

Vrije Universiteit Amsterdam; Tinbergen Institute; IZA Institute of Labor Economics

Jonathan Haskel

Imperial College Business School; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Ralf Martin

London School of Economics & Political Science (LSE) - Department of Economics; Imperial College Business School

Date Written: November 2008

Abstract

An extensive literature on the convergence of productivity between countries examines whether productivity is pulled towards the global frontier country, perhaps due to learning and knowledge spillovers. More recently, studies within countries use the wide dispersion of productivity across firms to explore convergence to the national frontier. Given this within-country dispersion however between country-dispersion is hard to interpret, for it is quite possible that the best firms in a laggard average country are above at least some firms in a leading average country. This paper therefore uses micro data sets across many countries to build better measures of global and national frontiers and firms' distance from them. Using UK data, we then find that (a) the national frontier exerts a stronger pull on domestic firms than does the global frontier and (b) the pull from the global frontier falls with technological distance, while the pull from the national frontier does not. This result suggests that firms might lag so far technologically that they cannot learn from the global frontier, while they still are able to benefit from domestic knowledge.

Keywords: convergence, distance to frontier, productivity, spillovers

JEL Classification: J24, O47, O57

Suggested Citation

Bartelsman, Eric J. and Haskel, Jonathan and Martin, Ralf, Distance to Which Frontier? Evidence on Productivity Convergence from International Firm-Level Data (November 2008). CEPR Discussion Paper No. DP7032, Available at SSRN: https://ssrn.com/abstract=1311156

Eric J. Bartelsman

Vrije Universiteit Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands
+31 (0)20 44 46044 (Phone)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jonathan Haskel (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom
020 7594 8563 (Phone)
020 7594 5915 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ralf Martin

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

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