Productivity dispersion and misallocation of resources: evidence from Polish industries

Differences in GDP per capita across countries are large and to a large extent accounted by differences in total factor productivity. We analyze role the misallocation of resources plays in helping us understand productivity differences. In theory, the extent of misallocation is worse when there is a greater productivity dispersion between firms in the same industry. We find significant differences in productivity dispersions within Polish industries but also compared to the same two-digit German industries. It provides evidence that misallocation of resources is important source of low level of total factor productivity.