Italy’s Total Factor Productivity in a Global Economy: Growth and Spillover Effects (c. 1400–2010)

Due to a lack of historical data, there is a gap in the literature with regard to total factor productivity (TFP) series in the long run for Italy. In this article, by combing information from the literature, original TFP estimates assessed with a “price dual” methodology (where changes in factor prices are used to capture physical output), and a Cobb–Douglas production equation, we first introduce a set of new TFP measures for Italy between 1360 and 1770 as well as for various global regions from c. 1400 to 2010. Second, the resulting new dataset allows us to decompose TFP in global spillover effects of technology and local effects for Italy in the long run. We find that spillover effects played a non-significant part in determining Italy’s TFP decline between c. 1600 and 1800. However, the spillover component grew faster during the period 1890–2010 and reached peaks during phases of declining local (trend) TFP growth, such as between the two world wars and in the period starting with the second globalisation (1989–2010).