Understanding multilevel interactions in economic development

Goedhuys, Micheline and Srholec, Martin (2010). Understanding multilevel interactions in economic development. UNU-MERIT.

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  • Author Goedhuys, Micheline
    Srholec, Martin
    Title Understanding multilevel interactions in economic development
    Publication Date 2010
    Publisher UNU-MERIT
    Abstract National framework conditions mediate the effect of technological capabilities of firms on their productivity. Although this has been recognized in the literature for a long time, a quantitative test that explicitly considers this hypothesis has been lacking. Using a World Bank datasets of about 19,000 firms in 42 countries, most of which are developing, we estimate a multilevel production function with effects of firm’s technological capabilities nested in the national framework conditions. Our results confirm that various facets of firm’s technological capabilities and national economic, technological and institutional conditions influence total factor productivity of firms. Furthermore, we find that the effects of the national conditions and firm’s technological capabilities are closely intertwined with each other. Adherence to international standards, formal training of workers and access to technology through foreign ownership make more difference for productivity of firms in less developed countries, while R&D capabilities on the contrary boost significantly more performance of firms in countries at the technological frontier. Different features of the national framework are shown to be responsible for this.
    Keyword Productivity
    Innovation
    Technological capability
    Institutions
    Multilevel modeling
    JEL C39
    D24
    O12
    O14
    O31
    O43
    Copyright Holder UNU-MERIT
    Copyright Year 2010
    ISSN 1871-9872
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    Created: Wed, 11 Dec 2013, 16:36:50 JST