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that is, establishment i’s log TFP relative to the maximum log TFP in the four digit sector (the “industry leader”).9 This is calculated using data for t−1 to reflect our assumption that past productivity is a good indicator of current efficiency.10 A high level of relative efficiency is supposed to indicate technological congruity with industry leaders, which are predominantly foreign plants in the data (see Griffith et al. 2002).
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