Trade, technology transfer and national efficiency in developing countries

This paper simultaneously explores the determinants of the developing countries’ production frontier and these countries’ ‘efficiency’ in using the available resources and technology. In doing so it allows for the transfer of (industrial country) technology in determining the frontier and for international trade's influence on absorptive capacity and national efficiency levels. Stochastic frontier analysis is used to model the production frontier for 57 developing countries for the period 1970-1998, to measure cross-country and temporal differences in efficiency levels and to explain the differences in efficiency levels. The results indicate significant differences in efficiency levels across countries and regions and movement over time, and an important influence of trade and trade policy in raising output both through technology improvements embodied in imported capital goods and by inducing efficiency improvements.     

Is Embodied Technology the Result of Upstream R&D? Industry-Level Evidence

This paper provides an exploratory analysis of whether data on the research and development (R&D) spending directed at particular technological/product fields can be used to measure industry-level capital-embodied technological change. Evidence from the patent literature suggests that the R&D directed at a product, as the main input into the “innovation” production function, is proportional to the value of the innovations in that product. I confirm this hypothesis by showing that the decline in the relative price of a good is positively correlated with the R&D directed at that product. The hypothesis implies that the technological change, or innovation, embodied in an industry's capital is proportional to the R&D that is done (“upstream”) by the economy as a whole on each of the capital goods that a (“downstream”) industry purchases. Using R&D data from the National Science Foundation, I construct measures of capital-embodied R&D. I find they have a strong effect on conventionally measured total-factor productivity growth, a phenomenon that seems to be due partly to the mismeasurement of quality change in the capital stock and partly to a positive correlation between embodied and disembodied technological change. Finally, I find the cross-industry variation in empirical estimates of embodied technological change accord with the cross-industry variation in embodied R&D. Journal of Economic Literature Classification Number: O3.     

The economics of poverty traps part one: Complete markets

This paper lists theoretical reasons why neoclassical models of one-sector growth imply that nations with identical economic structures need not converge to the same steady state or balanced growth path, and outlines the empirical significance and policy implications of conditional nonconvergence. We survey poverty traps in both convex and nonconvex economies with complete market structures. Among the potential causes of traps are subsistence consumption; distorted international trade in intermediate inputs; demographic transitions when fertility is endogenous; technological complementarities in the production of consumption goods, financial intermediation services, manufactures, or human capital; coordination failures among voters; various restrictions on borrowing; indivisibilities in human capital formation or child rearing; and monopolistic competition in product or factor markets.     

National product related welfare measures in the presence of technological change: Externalities and uncertainty

The purpose of this paper is to discuss under what conditions welfare can be measured by observables related to the national product (or Hamiltonian along the optimal trajectory). Under nonattributable technological or environmental change, welfare will depend on time itself, meaning that the Hamiltonian along the optimal trajectory will be a biased measure of welfare. This result will also hold if we make the time dependence of welfare endogenous, by replacing technological change will externalities that are not internalized during optimization. On the other hand, if we take the externalities fully into account, then the Hamiltonian will represent the appropriate measure of welfare. Similar results also hold in the case of uncertainty, where we show that a generalized Hamiltonian provides a welfare measure, and that the deterministic measures are special cases of their stochastic counterparts.     

Indra-Industry Trade,Endogenous Technical Change,Wage Inequality and Welfare

By using alternative intra-industry trade models (1. New goods cannot be introduced into the economy; 2. The possibility for a set of capital goods available in the economy to vary; the models consider the existence of intersectoral linkages), I show by means of Applied General Equilibrium (AGE) analysis that trade rises wage inequality between skilled and unskilled workers; but the impact on wage inequality is far larger, when countries are assumed to exchange differentiated capital goods. The latter result has been obtained by using an imperfect competitive model, which embodies a sector bias technological change that arises from trade. In addition, the gains from trade, insignificant under the standard trade hypotheses, are extraordinarily large when endogenous technological change is taken into account. The main policy conclusion is that if policy makers of flexible wage economies introduce trade barriers to reduce wage inequality, these protective measures, by affecting the diffusion of technology, would cause a large welfare loss. [D58, f12, F43, J3, O3]     

Embodied technological change in supplier dominated firms

This paper identifies the role of new capital goods as the main external source of innovation for supplier dominated firms belonging to traditional consumer good industries. After a brief survey on the role of inter-industry technology flows, the results of a field study are presented concerning the amount of technological change embodied in the new machinery acquired during the 1980s by a sample of Italian manufacturing firms producing traditional consumer goods. We show that industries and firms differ in the quality of technological change embodied in (or allowed by) new capital goods, and that such differences depend on industry-specific and firm-specific factors. The former primarily refer to product characteristics, the latter mainly to the age and the affiliation of the firm with an industrial group. The final section contains some policy suggestions for fostering the diffusion of new machinery (embodying technological change) among small firms and traditional industries.     

Environmental efficiency and labour productivity: Trade-off or joint dynamics? A theoretical investigation and empirical evidence from Italy using NAMEA

In this paper we test an adapted EKC hypothesis to verify the relationship between ‘environmental efficiency’ (namely emissions per unit of value added) and labour productivity (value added per employee). We exploit NAMEA data on Italy for 29 sector branches and 6 categories of air emissions for the period 1991-2001. We employ data on capital stock and trade openness to test the robustness of our results.On the basis of the theoretical and empirical analyses focusing on innovation, firm performances and environmental externalities, we would expect a positive correlation between environmental efficiency and labour productivity — a negative correlation between the emissions intensity of value added and labour productivity — which departs from the conventional mainstream view. The hypothesis tested is a critical one within the longstanding debate on the potential trade-off or complementarity between environmental preservation and economic performance, which is strictly associated with the role of technological innovation. We find that for most air emission categories there is a positive relationship between labour productivity and environmental efficiency. Labour productivity dynamics, then, seem to be complementary to a decreasing emissions intensity in the production process. Taking a disaggregate sector perspective, we show that the macro-aggregate evidence is driven by sector dynamics in a non-homogenous way across pollutants. Services tend always to show a ‘complementary’ relationship, while industry seems to be associated with inverted U-shape dynamics for greenhouse gases and nitrogen oxides. This is in line with our expectations. In any case, EKC shapes appear to drive such productivity links towards complementarity. The extent to which this evidence derives from endogenous market forces, industrial and structural change, and policy effects is discussed by taking an evolutionary perspective to innovation and by referring to impure public goods arguments.     

Aggregate convergence and sectoral specialization in innovation

Over the last 20 years OECD countries have converged in terms of their innovations, in parallel to the process of economic convergence and catching up in technology. However, this has not led to a similarity in the sectoral strengths of the majority of countries. Applying a measure of technological distance between pairs of countries based on patents, it is shown that nations have increased their technological specialization (i.e. their sectoral differences) over the 1980s. An apparent paradox is pointed out, as countries converge by becoming more different and grow by becoming more specialized.     

Technological catch-up: Gradual diffusion of technology and convergence in the neoclassical growth model

In this paper, I study the effects of the international gradual transmission of technology on the convergence processes among countries. In this way, the international gradual diffusion of technology makes possible a greater potential improvement capacity to the less developed country in its technological level. When this hypothesis is included in the Solow-Swan growth models, the paper shows that the convergence hypothesis will now be maintained only in the growth rates since a gap in income levels will remain in the long run. That conditional convergence will be explained by two factors: the diminishing returns for cumulative factor and the gradual diffusion of technology. I will finish this paper with empirical evidence of these two factors explaining convergence.     

Employment protection, international specialization, and innovation

We develop a model to analyze the implications of firing costs on incentives for R&D and international specialization. The key idea is that countries with a rigid labor market will tend to produce relatively secure goods, at a late stage of their product life cycle. Consequently, their researchers tend to specialize in ‘secondary innovation’ which improves existing products, rather than ‘primary innovation’ which introduces new products. This is roughly consistent with the observed pattern of R&D in Europe versus the U.S. Employment protection does not necessarily harm the country where it prevails, but typically reduces world welfare and the world number of goods.     

Gross Investment And Technological Change

The impact of technological change upon gross investment has been relatively ignored. Building upon the foundations of the analysis of technological diffusion, an empirical model of gross investment is constructed that takes due account of technological change. This model is then tested upon a panel data set covering 185 UK firms over the period from 1984 to 1992. The results support the hypothesis that there are significant relationships of the expected signs between firm level gross investment, indicators of technological opportunity; the price of the capital goods that embody new technology, and firm and industry characteristics. There is also evidence of lagged adjustment effects in the investment process.     

An approach to the construction of indexes of technological change and of technological sophistication : The case of agricultural tractors

Two indicators of the output of technological innovation have been developed for the case of agricultural tractors. The tractor is a multicharacteristic product, and a fundamental problem in measuring its technological sophistication or technological change is to determine the relative weights of different characteristics. These relative weights have been approximated by the coefficients of a regression of tractor price with respect to tractor technical characteristics. The indicators developed allow one to measure technical change over time or the relative technical sophistication of different tractor models or tractor firms at a given moment. These indicators can be applied only to multicharacteristic products with easily quantifiable characteristics. However, products that satisfy these requirements account for a very large share of the market for industrial goods. These indicators can be useful in assessing the efficiency of R&D, in analyzing the influence of technological innovation on patterns of trade, and in determining the contribution of changes in the quality of capital goods employed to increases in industrial productivity.     

Embodiment, productivity, and the age distribution of capital

An important theme in modern research on productivity has been that technological progress may be embodied in capital in the sense that traditional measures of TFP growth reflect unmeasured improvements in the quality of capital inputs as well as pure disembodied technological progress. It is commonly believed that an implication of this embodiment hypothesis is that there should be a negative relationship between measured TFP and the age of the measured capital stock. This paper presents empirical evidence which suggests that an increase in the age of the capital stock is actually associated with higher TFP growth. This surprising result may be due to the presence of a mis-measurement normally overlooked in this literature: With mis-measured improvements in capital quality, the usual depreciation rates used to construct empirical capital stocks are incorrect for growth accounting. This effect dominates the usual average age effect.     

Comparing technological hype cycles: Towards a theory

The notion of ‘hype’ is widely used and represents a tempting way to characterize developments in technological fields. The term appears in business as well as in academic domains. Consultancy firms offer technological hype cycle models to determine the state of development of technological fields in order to facilitate strategic investment decisions. In Science, Technology and Innovation Studies the concept of hype is considered in studies on the dynamics of expectations in innovation processes, which focuses on the performative force of expectations. What is still lacking is a theory of hype patterns that is able to explain the different shapes of hype cycles in different contexts. In this paper we take a first step towards closing this gap by studying and comparing the results of case studies on three hypes in three different empirical domains: voice over internet protocol (VoIP), gene therapy and high-temperature superconductivity. The cases differ in terms of the type of technology and the characteristics of the application environment. We conclude that hype patterns indeed vary a lot, and that the interplay of expectations at different levels affects the ability of a field to cope with hype and disappointment.     

Graded eco-labels: A demand-oriented approach to reduce pollution

Supplied oriented environmental policies are generally used in order to limit production related pollution. This fact is based on the hypothesis that consumers are not willing to sacrifice personal utility for a wider social gain. We suggest that widespread environmental concerns of consumers can be exploited to push producers along cleaner technological patterns. Our core assumption is that consumers would be ready to purchase cleaner products if the products' characteristics are not ‘too dissimilar’ to those of more polluting alternatives. However, due to a lack of information about non-observable product characteristics, this assumption on its own is not sufficient for ‘environmental friendly’ producers to become competitive. We show - by means of a simulation model - that only if consumers are provided with appropriate information on the greenness of products through adequate eco-labels (graded eco-labels), then producers will be pressed to implement innovations aimed at reducing the environmental impact of their products. Under two test settings - one without any certification and another with binary eco-labels - the model shows markets characterised by highly polluting technological patterns. Only in the presence of graded eco-labels, competition drives the market toward cleaner technological patterns.     

Openness to trade as a determinant of the macroeconomic elasticity of substitution

Several theoretical and empirical studies on economic growth consider the macroeconomic elasticity of substitution between capital and labor as a measure of economic flexibility that depends on technological as well as institutional aspects. One institutional aspect of economic flexibility is openness to trade. I examine in a Heckscher–Ohlin model with two large countries trading intermediate goods how openness affects the elasticity of substitution. If the technology has a constant elasticity of substitution in a closed economy, opening up to trade raises the elasticity of substitution only in the country that accumulates capital at a faster rate.     

Appropriate technology assessment: A note on policy considerations

This paper summarizes various positions on appropriate technology and its relation to technological dependence, and certain contradictions within the concept are pointed out. An alternative approach to policy questions in appropriate technology assessment and independence is then proposed using a framework involving three economic sectors—the consumer goods sector, capital goods sector, and technological change sector.     

Ramsey Equilibrium in a Two-Sector Model with Heterogeneous Households

We prove an existence theorem for a stationary perfect foresight equilibrium under borrowing constraints in a two-sector model with infinitely lived heterogeneous agents. The most patient agent holds all the capital in this solution. We also show that if the capital goods sector is capital intensive and capital income is increasing in the aggregate capital stock, then the aggregate capital stock eventually is monotonic and converges to the steady state stock. If the consumption goods sector is more capital intensive and capital income is increasing in aggregate capital we prove convergence to the steady state under more restrictive conditions. Periodic equilibria are shown to exist under weaker hypotheses. Journal of Economic Literature Classification Numbers: D52, D90, E13.     

Conditional factors Pushing catch-up across developed and emerging countries in the nanotechnology sector, 2000–2010

ABSTRACT

The aim of this article is to test national and sectorial technological and innovation capability factors, as well as social capability indicators, which could explain a possible conditional convergence across countries in nanotechnology within the context of a model of innovative technological knowledge β convergence. Based on growth convergence models, our proposal also takes into account the Schumpeterian theory, the National System Innovation –NSI– approach, and particularly the sectorial system of innovation and the technological catch-up hypothesis, as well as theoretical and empirical literature on conditional convergence. The findings allow us to confirm that new nanotechnology knowledge convergence is conditioned by a higher growth rate of technological capabilities in nanotechnology: growth from the initial level of patents granted, cumulative knowledge, and links to technological and scientific activities. Finally, as regards social capabilities, only the institutional weakness variable (corruption index) associates negatively with β convergence. As an emergent paradigm, we realize that convergence and catch-up are starting processes, which could allow less technologically developed countries to benefit from higher growth of some of the factors identified.     

技术进步的“体现观”与技术收敛测度指标构建

技术进步在经济增长与区域经济协调发展中的动力作用一直是人们关注的话题。区域间技术收敛是实现区域间经济收敛的必要条件。文章从经济增长理论中技术进步的分类出发,剖析了外生与内生、体现式与非体现式、资本偏向和劳动偏向等概念之间的关系,进一步给出了技术收敛的测度指标体系。文章认为,当前关于技术内生和外生的研究并没有与技术进步的"体现观"结合起来。新古典增长理论中所指的技术进步主要是非体现式的技术进步。内生增长理论中的体现式技术进步主要是体现在资本或劳动力中的技术进步。所以,技术收敛的分析应该在经济收敛分析方法的基础上,充分考虑体现在资本和劳动力中的技术和没有体现在要素中的技术,建立相应的测度指标体系。这种测度技术收敛的方法与一般性的技术收敛测度相比具有明显的优点,对相关的产业技术政策、人力资本流动政策以及产业转移等政策的制定具有重要的指导意义。