Productivity trends in Southern EU

Spain

Gopinath and al. in this paper use data for manufacturing firms in Spain from 1999 to 2015 to show that the decline in the real interest rate, most probably due to the euro adoption, lead to a significant decline in sectoral total factor productivity as capital inflows were misallocated toward firms that had higher net worth but were not necessarily more productive. This conclusion, they argue, can apply also to Italy and Portugal but not to Germany, France and Norway.
Capital Allocation and Productivity in South Europe
Authors: Gita Gopinath, Şebnem Kalemli-Özcan, Loukas Karabarbounis,Carolina Villegas-Sanchez
From: Federal Reserve Bank of Minneapolis

Italy

Pellegrino and Zingales take the argument of misallocation a step further by showing that in Italy manufacturing firms are plagued by “familyism” and cronyism, two characteristics that prevent them from selecting and rewarding efficiently their managers. As a result, this inefficient firm management was the reason why Italian firms failed to take full advantage of the ICT revolution that has lead to low Italian productivity.

Diagnosing the Italian Disease
Authors: Bruno Pellegrino, Luigi Zingales
From: University of California Los Angeles – University of Chicago

Portugal

Ricardo Pinheiro Alves confirms Gopinath and al.’s conclusion of capital misallocation caused by the decline in real interest rates. He explains that capital was channeled to state and/or protected industries since firms in the tradeable sector with higher productivity had to downsize as a result of the European integration and trade liberalization.

Portugal: a Paradox in Productivity
Author:Ricardo Pinheiro Alves
From: GEE