Regional productivity convergence: An analysis of the pulp and paper industries in U.S., Canada, Finland, and Sweden

In this paper we investigate the presence of productivity convergence in eight regional pulp and paper industries of U.S. and Canada over the period of 1971-2005. Expectation of productivity convergence in the pulp and paper industries of Canadian provinces and of the states of its southern neighbour is high since they are trading partners with fairly high level of exchanges in both pulp and paper products. Moreover, they share a common production technology that changed very little over the last century. We supplement the North-American regional data with national data for two Nordic countries, Finland and Sweden, which provides a scope to compare the productivity performances of four leading players in global pulp and paper industry. We find evidence in favour of the catch-up hypothesis among the regional pulp and paper industries of U.S. and Canada in our sample. The growth performance is at the advantage of Canadian provinces relative to their U.S. counterparts. The two Nordic countries, that had the lowest productivity levels in 1971, erased most of the gap and in some cases moved ahead of their North-American counterparts.