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Discussion Paper Details

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Title: Technology Within and Across Firms

Author(s): Xavier Cirera, Diego Comin, Marcio Cruz and Kyungmin Lee

Publication Date: November 2020

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Programme Area(s): Development Economics, Industrial Organization, International Macroeconomics and Finance, Macroeconomics and Growth and Monetary Economics and Fluctuations

Abstract: We collect data on the sophistication of technologies used at the business function level for a representative sample of firms from Vietnam, Senegal and the Brazilian state of Cear�. Our analysis finds a large variance in technology sophistication across the business functions of a firm. Specifically, the within-firm variance in technology sophistication is greater than the variance in sophistication across firms, which in turn is greater than the variance in sophistication across regions or countries. We document a stable cross-firm relationship between technology at the business function and at the firm level that we name the technology curve. We uncover significant heterogeneity in the slope of technology curves across business functions, a finding consistent with non-homotheticities in firm-level technology aggregators. Firm-productivity is positively associated to both the within-firm variance and average level of technology sophistication. Development accounting exercises show that cross-firm variation in technology accounts for one third of cross-firm differences in productivity, and one fifth of the agricultural vs. non-agricultural gap in cross-country differences in firm productivity.

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Bibliographic Reference

Cirera, X, Comin, D, Cruz, M and Lee, K. 2020. 'Technology Within and Across Firms'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15427