Entrepreneurship culture, total factor productivity growth and technical progress: Patterns of convergence towards the technological frontier

• The entrepreneurial culture of a country affects the set of knowledge processes of the firms located in it.
• The influence of entrepreneurship is larger in countries that are technology leaders.
• For technology leaders, domestic research effort has a positive impact on productivity growth.
• For technologically dependent countries, domestic research effort does not affect significantly the evolution of its stock of ideas.
• Technologically dependent countries benefits to a larger extend than technology leaders from their relative technological backwardness by adopting advances from abroad.

A firm's set of knowledge processes may be affected by the entrepreneurial culture of the country in which it is located. Total factor productivity, mainly associated with technical progress, accounts for most differences over time and across countries. In the present work we examine the determinants of total factor productivity growth in 26 OECD countries between 1965 and 2010, breaking them down into changes in technical efficiency and shifts in technology over time. Using the US as the technology frontier, different patterns of productivity growth emerge between world technology leaders and countries with low initial levels of productivity. Whereas changes in efficiency seem to be the main result of the evolution in the stock of knowledge in technologically dependent economies, suggesting that less advanced economies can benefit from their relative backwardness, domestic research effort appears to be a relevant factor for technology leaders.