Productivity, Infrastructures and Convergence: Panel Data Evidence on Italian Regions

Abstract

The paper first employs the Growth Accounting methodology in order to calculate the annual levels of Total Factor Productivity (TFP) in Italian regions for the period 1970-2001. The main result of this initial analysis is that the well-known gap in labour productivity among Italian regions depends mostly on the differences in TFP. The paper then investigates on the presence (or absence) of regional convergence in TFP over the period considered. To this end, physical and social infrastructures are taken into account as factors that influence the process of convergence. Finally, the paper finds a significant effect of both types of infrastructure on regional convergence in TFP, which is estimated to occur over the whole time period at the rate of 11%.