Presentation by Mariarosaria Agostino, Associate Professor, Department of Economics, Statistics and Finance, University of Calabria, Italy at the 16th Spatial Productivity Lab meeting on "Regional institutions and productivity: Implications for policy" held on 10 March 2022 in virtual format. More information: https://oe.cd/spl-mtg

1. MARIAROSARIA AGOSTINO
Associate Professor, Department of Economics, Statistics and Finance,
University of Calabria, Italy
Regional institutions and productivity: Implications for policy | 10 March 2022 | 14.00-15.30 | WEBINAR
#spatialproductivity
Institutions and SME productivity
Institutional quality and firms’ productivity in European regions
Mariarosaria Agostino, Marco R. Di Tommaso , Annamaria Nifo, Lauretta Rubini and
Francesco Trivieri, Regional Studies, 2021, Vol. 54, 9, 1275-1288

2. Literature background
Empirical studies on the relationships between local institutions and
firms’ productivity are not numerous (e.g. Del Bo, 2013; Lasagni et al., 2015;
Ganau and Rodriguez Pose, 2019; Raimondo et al., 2020; Rodriguez Pose et al.,
2020; Agostino et al., 2021)
Even more limited is the number of works that investigate how local
institutions interplay with firms’ characteristics (e.g. Ganau and Rodriguez
Pose, 2019; Rodriguez Pose et al., 2020; Agostino et al., 2021)

3. Open empirical question
LIQ can be regarded as a peculiar kind of input, either
 complement (Porter, 1980; Teece 1986)
 or substitute (Ma et al. 2013; Lee & Lee 2019 )
for favourable characteristics of the firms or the economic environment

4. Data
 EFIGE survey. Average TFP (2010-2014 ) of approximately
6,500 manufacturing SMEs (hiring less than 250
employees), based in seven European countries: Austria,
France, Germany, Hungary, Italy, Spain, UK
 Region-level institutional endowment (Charron et al.,
2014):
• EQGI index, rule of law (RUL) and government
effectiveness (GOV)

5. Empirical strategy
Adopting a multilevel approach and a quantile regression, the
relationship between LIQ and SMEs’ TFP is modelled as conditional
on:
 firms’ characteristics (productivity, age, size, HK)
 the technological level of the industrial sector
 the economic performance of the region

6. Results and Policy Implications
 Significant positive impact of institutions on firms’ TFP
 Good institutions seem to matter more for: less productive
firms; smaller; younger; less human-capital intensive firms;
those operating in less technologically advanced industries
For instance, the impact of LIQ for larger firms is about 60% of the impact
exerted on other firms
Better institutions might particularly favour weaker enterprises
Therefore, promoting institutional improvement de facto
would translate into an investment for “building future
winners”

7. Research based on WB Enterprise Surveys
 Similar results in a large sample of transition countries
 Good institutions (RUL) seem associated with a higher probability
of innovating, in particular for less endowed firms
 Better institutions generate a “Rising-Tide-Lifts-All-Boats” effect
mostly benefitting less capable enterprises

8. Thank you