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                    The Determinants of Economic Competitiveness
                    Kluge, Jan; Lappöhn, Sarah; Plank, Kerstin
                    Veröffentlichungsversion / Published Version
                    Arbeitspapier / working paper
                 Empfohlene Zitierung / Suggested Citation:
                 Kluge, J., Lappöhn, S., & Plank, K. (2020). The Determinants of Economic Competitiveness. (IHS Working Paper, 24).
                 Wien: Institut für Höhere Studien (IHS), Wien. https://nbn-resolving.org/urn:nbn:de:0168-ssoar-71205-9
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                                   IHS Working Paper 24
                                           October 2020
                 The Determinants of Economic 
                                Competitiveness
                                            Jan Kluge
                                        Sarah Lappöhn
                                          Kerstin Plank
           Author(s)
           Jan Kluge, Sarah Lappöhn, Kerstin Plank
           Editor(s)
           Robert M. Kunst
           Title
           The Determinants of Economic Competitiveness
           Institut für Höhere Studien - Institute for Advanced Studies (IHS)
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           Funder(s)
           OeNB Anniversary Fund
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           „The Determinants of Economic Competitiveness“ by Jan Kluge, Sarah Lappöhn, Kerstin 
           Plank is licensed under the Creative Commons: Attribution 4.0 License 
           (http://creativecommons.org/licenses/by/4.0/)
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                     The Determinants of Economic
                                                                           ∗
                                     Competitiveness
                              ∗∗
                 Jan Kluge                    Sarah Lappöhn                    Kerstin Plank
                                              October 14, 2020
                    This paper aims at identifying relevant indicators for TFP growth in EU coun-
                    tries during the recovery phase following the 2008/09 economic crisis. We
                    proceed in three steps: First, we estimate TFP growth by means of Stochastic
                    Frontier Analysis (SFA). Second, we perform a TFP growth decomposition
                    in order to get measures for changes in technical progress (CTP), technical
                    efficiency (CTE), scale efficiency (CSC) and allocative efficiency (CAE). And
                    third, we use BART – a non-parametric Bayesian technique from the realm
                    of statistical learning – in order to identify relevant predictors of TFP and its
                    components from the Global Competitiveness Reports.
                      We find that only a few indicators prove to be stable predictors. In par-
                    ticular, indicators that characterize technological readiness, such as broad-
                    band internet access, are outstandingly important in order to push technical
                    progress while issues that describe innovation seem only to speed up CTP in
                    higher-income economies.
                      The results presented in this paper can be guidelines to policymakers as
                    they identify areas in which further action could be taken in order to increase
                    economic growth. Concerning the bigger picture, it becomes obvious that
                    advanced machine learning techniques might not be able to replace sound
                    economic theory but they help separating the wheat from the chaff when it
                    comes to selecting the most relevant indicators of economic competitiveness.
                    Keywords: Competitiveness,TFPgrowth,StochasticFrontierAnalysis,BART
                    JEL classification: C23, E24, O47
               ∗ TheauthorswishtothanktheOesterreichischeNationalbank(OeNB)foritsgenerousfinancialsupport
                 (Anniversary Fund, project no. 17686)
              ∗∗ Corresponding author. Institute for Advanced Studies, Josefstädter Straÿe 39, 1080 Vienna, Austria,
                 kluge@ihs.ac.at