Tag Archives: Multifactor Productivity

FEMISE MED BRIEF no14 : “How does spatial proximity of firms contribute to EU-Med transition ?”

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Dr. Anna M. Ferragina, CELPE, University of Salerno, FEMISE

The FEMISE Policy Brief series MED BRIEF aspires to provide Forward Thinking for the EuroMediterranean region. The briefs contain succinct, policy-oriented analysis of relevant EuroMed issues, presenting the views of FEMISE researchers and collaborators to policy-makers.

The latest MED BRIEF on “How does spatial proximity of firms contribute to the transition of the EU-Med region? Empirical evidence from Turkey, Italy and Tunisia” is available here. 

It is also available here in Arabic as well.

 

Abstract: In this policy brief we provide policy implications and recommendations on how firms’ productivity react to spatial economic drivers of growth related to agglomeration economies, clustering of innovation, and localisation of FDI. We observe how these features interact with firm characteristics (specifically size, ownership, and innovation) focusing on three case studies: Turkey, Italy, and Tunisia. Overall, the estimation results suggest significant productivity enhancing agglomeration and innovation effects, in particular spillovers are higher between firms operating in the same sector and region and having small technology divides. In addition, evidence on productivity spillovers from neighbouring foreign firms is less robust. The results of the study confirm the efficiency of clusters of SMEs in  South Mediterranean countries and helps identifying key drivers and patterns of localised production providing a benchmark of analysis. The evidence support policies which pay specific effort to enhance the absorptive capacity of less technologically sophisticated firms by supporting R&D investment and human capital qualification allowing firms to compete and benefit of surrounding spillovers in agglomerated areas. Another policy target for the government should be investing in transportation infrastructure, easing access to housing and developing regional complementarities. This would lead to a more sustainable convergence of standards of living among regions in the long-term, and would reduce the exploitation of resources along the coast and the pressure on natural resources.

The list of FEMISE MED BRIEFS is available here.

The policy brief has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union.

Spatial proximity and firm performances: how can location-based economies help the transition ?

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The aim of this project is to investigate the productivity impact on firm’s performance stemming from location-based economies due to agglomeration of firms, clustering of innovation and localisation of FDI in three Mediterranean countries, Turkey, Italy and Tunisia. More specifically the research addresses three main questions: 1) the relationships between agglomeration economies and firms’ productivity; 2) the role of innovation spillovers at spatial level taking into account geographical and sector clustering of firms; 3) the spillovers from foreign MNEs at regional and sector level.

The choice of Turkey, Italy and Tunisia as case studies is based on the relevance that economies of agglomeration play in their economy. Italy provides an important benchmarking and is the most critical observatory among North Mediterranean countries for analysing the positive and negative impact of regional agglomeration of activities due to the traditional relevance of regional clusters of development (Industrial Districts) and big regional divides. Turkey and Tunisia are two very interesting case studies due to the emerging innovation clusters over the last years, marked by a large diffusion of science parks, innovation clusters, incubators, special economic zones (SEZs), Centre business districts (CBDs) (in Tunisia) and by an increasing role of multinational corporations (MNC).

Overall, the estimation results suggest some common findings for the three case studies: there are significant productivity enhancing agglomeration effects, in particular there are significant spillovers between firms operating in the same sector and region, spillovers from innovation at local level are also strong, and higher output of foreign firms produce positive spillovers on productivity in the province. However, spillovers are specific to technologically more sophisticated firms.