This paper examines the link between barriers to trade and investment and productivity performance, in the United Kingdom and selected European countries using both firm-level and sectoral data. Barriers to trade and investment appear to be a robust determinant of productivity in the long term. Control variables such as spending on R&D and human capital also play a role, though their effects depend on the way they are measured or on the sample. The results are robust across a range of productivity measures as well as to changes in the sectoral coverage and the set of controls.
