The effect of congestion and agglomeration on multifactor productivity growth in Dutch regions

It is well known that labour productivity growth in Europe isslowing down, against an increasing growth rate in the US. TheNetherlands is one of the countries in Europe with the lowestgrowth rates of productivity. This article looks at this phenomenonfrom a regional perspective and presents the results of a growthaccounting exercise applied to regional industry data of TheNetherlands between 1995 and 2002. We find that slow productivitygrowth in The Netherlands is particularly situated in the economiccore regions and is caused by slow multifactor productivity(mfp) growth. A substantial part of this slow mfp-growth canbe explained by the fact that positive agglomeration advantagesare overruled by negative congestion effects caused by trafficjams.