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The main goal of this paper is to empirically investigate the regional dimension of productivity determinants for 24 regions of Ukraine using micro-level dataset for individual firms in 2013. The novelty of our analysis is the comparison of the determinants of productivity in the manufacturing and service sectors. We estimate both pooled regressions for all regions and separate regressions for particular regions. The estimation results obtained for the entire country demonstrate that the majority of our explanatory variables are statistically significant for the manufacturing sector and all are statistically significant for the service sector although at different levels of significance. At the same time, the estimation results obtained separately for each region show a large degree of heterogeneity across the regions and sectors and the lack of scale economies at the firm-level.

Regional dimension of firm level productivity determinants: the case of manufacturing and service firms in Ukraine