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Public investment and corporate productivity in Croatia
Sanja Borkovic*
Sanja Borkovic
Affiliation: Analyst, European Bank for Reconstruction and Development, Belgrade, Serbia
 0000-0003-4602-2021
Peter Tabak* 
Article | Year: 2018 | Pages: 171 - 186 | Volume: 42 | Issue: 2 Received: November 20, 2017 | Accepted: January 17, 2018 | Published online: June 5, 2018
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
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Variable
|
Description
|
Level
|
Source
|
|
Private investment
|
The firm's fixed assets,
adjusted for depreciation and amortization (log, change)
|
Firm
|
ORBIS
|
|
Total government investment
|
Gross fixed capital formation
within the total general government expenditure (log change)
|
Country
|
EUROSTAT
|
|
Government investment in
human capital
|
Gross fixed capital formation
in education, health and housing and community amenities (log, change)
|
Country
|
EUROSTAT
|
|
Government investment in
transport
|
Gross fixed capital formation
in transport within general government expenditure on economic affairs (log,
change)
|
Country
|
EUROSTAT
|
|
Government investment in
R&D
|
Gross fixed capital formation
in research and development within general government expenditure on economic
affairs (log, change)
|
Country
|
EUROSTAT
|
|
Efficacy of corporate boards
|
Efficacy of corporate boards
score in the WEF's Global Competitiveness Index (value 1-7, change)
|
Country
|
World Economic Forum
|
|
Flexibility of wages
|
Flexibility of wage
determination score in the WEF's Global Competitiveness Index (value 1-7,
change)
|
Country
|
World Economic Forum
|
|
GHG emissions
|
Ratio of greenhouse gas
emissions to gross value added (GVA) by sector (tonne/EUR)
|
Sector
|
EUROSTAT
|
|
Goods market efficiency
|
Goods market efficiency score
in the WEF's Global Competitiveness Index, assessing the quality of supply-and-demand
conditions (value 1-7, change)
|
Country
|
World Economic Forum
|
|
Hiring and firing practices
|
Hiring and firing practices
score in the WEF's Global Competitiveness Index (value 1-7, change)
|
Country
|
World Economic Forum
|
|
Institutions
|
Institutions score in the
WEF's Global Competitiveness Index, assessing the quality of public and
private institutions (value 1-7, change)
|
Country
|
World Economic Forum
|
|
Intangible in total assets
|
Share of intangible in total
assets (per cent)
|
Firm
|
ORBIS
|
|
Market concentration
|
Herfindahl–Hirschman index,
defined as the sum of the squares of market shares of the firms within a
sector of economy (log, change), except in the specification for the sector
of tourism in which it is the share of the top 5 companies in the sector in
total revenues (per cent, change)
|
Sector
|
ORBIS
|
|
NPLs
|
Ratio of non-performing to
total gross corporate loans, by sector (per cent, change)
|
Sector
|
Croatian National Bank
|
|
Professional management
|
Reliance on professional management
score in the WEF's Global Competitiveness Index (value 1-7, change)
|
Country
|
World Economic Forum
|
|
Youth employment
|
Share of the youth population
(age 15-24) in total employment, by sector (per cent, change)
|
Sector
|
EUROSTAT
|
|
Variables
|
Total economy
(1)
|
Total economy
(2)
|
Private sector
|
|
Lagged dep. variable
|
0.2638***
|
0.2385***
|
0.2394***
|
|
(0.0266)
|
(0.0043)
|
(0.0150)
|
|
Private investment (-1)
|
0.0005
|
|
|
|
(0.0009)
|
|
|
|
Total government investment
(-4)
|
0.0520***
|
|
0.0445***
|
|
(0.0101)
|
|
(0.0046)
|
|
Government investment in
human capital (-3)
|
|
0.0067
|
|
|
(0.0125)
|
|
|
Government investment in
transport (-4)
|
|
0.0251***
|
|
|
(0.0036)
|
|
|
Government investment in
R&D (-2)
|
|
0.0326***
|
|
|
(0.0091)
|
|
|
NPLs (-1)
|
-0.0022**
|
-0.0014***
|
-0.0013***
|
|
(0.0008)
|
(0.0003)
|
(0.0003)
|
|
Youth employment (-2)
|
0.0063***
|
0.0054***
|
0.0057***
|
|
(0.0018)
|
(0.0009)
|
(0.0009)
|
|
Market concentration
|
-0.1013**
|
-0.0860***
|
-0.0908***
|
|
(0.0379)
|
(0.0174)
|
(0.0178)
|
|
Institutions (-1)
|
0.1033**
|
0.0735***
|
0.0531***
|
|
(0.0336)
|
(0.0141)
|
(0.0149)
|
|
Intangible in total assets
(-1)
|
0.3430**
|
0.1551***
|
0.1510***
|
|
(0.1119)
|
(0.0307)
|
(0.0417)
|
|
Hiring and firing practices
(-2)
|
0.0661***
|
0.0397***
|
0.0637***
|
|
(0.0132)
|
(0.0070)
|
(0.0055)
|
|
Constant
|
0.0207**
|
0.0160***
|
0.0180***
|
|
(0.0097)
|
(0.0028)
|
(0.0029)
|
|
Number of observations
|
33,107
|
176,887
|
175,899
|
|
Number of enterprises
|
15,529
|
48,129
|
47,911
|
|
Number of instruments
|
29
|
30
|
28
|
Notes: The dependent variable is the log of TFP. Robust standard errors are in parentheses. For the specification tests, p-values are reported. *, ** and *** indicate that the coefficients are significant at the 10, 5, and 1 per cent level, respectively.
Table 1Variable definitions and sources DISPLAY Table
Figure 1Key productivity determinants DISPLAY Figure
Chart 1Estimated three-year average TFP growth rate, total economy and by sector DISPLAY Chart
Table 2TFP determinants in Croatian corporate sector DISPLAY Table
Table 3Key TFP determinates by sector DISPLAY Table
* The authors thank Emir Zildzovic for his invaluable help in the development of the methodology and two anonymous referees for useful comments and suggestions.
2 This section draws from Zildzovic et al. (  2016:89-90).
3 In other words the error term is expected to influence the decision on factor inputs (labour and capital).
4 This is new concept of the European Bank for Reconstruction and Development (EBRD) for measuring the transition to a market economy. For more detail please visit link or see EBRD ( 2018:105-115).
5 Calculated by multiplying the estimated coefficient by the ratio between the standard deviations of the independent and the dependent variables.
6 Some of the variables that were statistically significant previously, now seem not to be and/or have wrong signs. Public investment is significant at 10 per cent level.
7 More detailed sectoral results are available on request.
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June, 2018
II/2018 |
