Convergence of Firm-Level Productivity, Globalisation, Information Technology and Competition: Evidence from France

Studies of firm-level data have shown that there is a huge dispersion of productivity across firms even when industries are narrowly defined. So there is a significant opportunity for the least productive firms to catch up to the most productive. The formers' convergence could therefore constitute an important part of productivity growth at the macroeconomic level. This article sheds light on this convergence process in the 1990s and the 2000s in France and on some of the factors which can explain it. Productivity convergence was stronger for labour productivity than for total factor productivity. But most importantly the speed of convergence has slowed during the course of the 1990s, a fact which is explained principally by the acceleration of the productivity of firms on the technological frontier. Three possible explanations of these stylised facts are considered: globalisation, information technology, and competition. Globalisation and information technology may have benefited the most productive firms more and the growth of competition may at the same time have stimulated the productivity of firms at the frontier while discouraging the convergence of the least productive firms.