Public investment and corporate productivity in Croatia

Borkovic, Sanja; Tabak, Peter

doi:10.3326/pse.42.2.9.

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Public investment and corporate productivity in Croatia

Sanja Borkovic*

Peter Tabak*

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https://doi.org/10.3326/pse.42.2.9

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Table 1
Variable definitions and sources

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

Table 2
TFP determinants in Croatian corporate sector

Variables	Total economy (1)	Total economy (2)	Private sector
Lagged dep. variable	0.2638***	0.2385***	0.2394***
Lagged dep. variable	(0.0266)	(0.0043)	(0.0150)
Private investment (-1)	0.0005
Private investment (-1)	(0.0009)
Total government investment (-4)	0.0520***		0.0445***
Total government investment (-4)	(0.0101)		(0.0046)
Government investment in human capital (-3)		0.0067
Government investment in human capital (-3)		(0.0125)
Government investment in transport (-4)		0.0251***
Government investment in transport (-4)		(0.0036)
Government investment in R&D (-2)		0.0326***
Government investment in R&D (-2)		(0.0091)
NPLs (-1)	-0.0022**	-0.0014***	-0.0013***
NPLs (-1)	(0.0008)	(0.0003)	(0.0003)
Youth employment (-2)	0.0063***	0.0054***	0.0057***
Youth employment (-2)	(0.0018)	(0.0009)	(0.0009)
Market concentration	-0.1013**	-0.0860***	-0.0908***
Market concentration	(0.0379)	(0.0174)	(0.0178)
Institutions (-1)	0.1033**	0.0735***	0.0531***
Institutions (-1)	(0.0336)	(0.0141)	(0.0149)
Intangible in total assets (-1)	0.3430**	0.1551***	0.1510***
Intangible in total assets (-1)	(0.1119)	(0.0307)	(0.0417)
Hiring and firing practices (-2)	0.0661***	0.0397***	0.0637***
Hiring and firing practices (-2)	(0.0132)	(0.0070)	(0.0055)
Constant	0.0207**	0.0160***	0.0180***
Constant	(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.

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