Productive Performance and Technology Gaps using a Bayesian Metafrontier Production Function: A cross-country comparison.

Growth theory argues on the role of heterogeneity that can lead to multiple regimes examining countries’ performance. A meta-production stochastic function under a Bayesian perspective has been developed to estimate technical efficiencies across countries over a time period. The metafrontier model is used to highlight heterogeneity among cluster of countries revealing catch up phenomena. The estimation procedure relies on the solution of an optimization problem and on the concept of the upper orthant order of two multinormal random variables. The proposed models are applied in a real dataset consisting of 109 countries for a 20-year period from 1995-2014. The productive performance differential and the associated technology gaps were investigated using two distinct frontiers (OECD vs non-OECD countries). Empirical results reveal that heterogeneity indeed plays a significant and distinctive role in determining technological gaps.