Tradability and productivity growth differentials across EU Member States
Structural Change and Economic Dynamics, 2019
We apply the tradable-nontradable framework to evaluate the lack of convergence in labour productivity among EU Member States.
Our results show that increases in overall productivity are primarily due to the tradable and not the nontradable sectors
of production. The low productivity growth in peripheral EU countries before the crisis was accompanied by a sharp increase
in the production of nontradables (i.e., nontradable goods and services) relative to other EU countries. We identify differences
in the legal systems and the quality of public institutions, among others, as factors relevant for explaining the observed
productivity growth differentials. Our findings have implications for the European Commission's macroeconomic imbalance procedures
since the tradable-nontradable approach allows identifying patterns of real divergence on a disaggregated level.
Forschungsbereich:Industrieökonomie, Innovation und internationaler Wettbewerb – Makroökonomie und europäische Wirtschaftspolitik