Localized Innovation and Productivity Growth in Asia: An Intertemporal DEA Approach

Recent contributions to growth theory stress the importance of localized innovation for the performance of more backward countries. In earlier papers, analyses by means of DEA techniques confirmed this intuition. In this paper, we extend this type of analysis by relaxing the macroeconomic viewpoint adopted until now. New databases on output, labor and capital input in the agricultural and manufacturing sectors are developed for 40 countries. Using intertemporal DEA, it is found that changes in the global production frontier are localized at high levels of capital intensity. This result is stronger in agriculture than in manufacturing. Further, a decomposition of labor productivity growth in eight Asian countries for the period 1975–1992 into the effects of capital intensification, learning and innovation is made. The results suggest that there is a particular development path in which increases in capital intensity appear to be a prerequisite to benefit from international technology spillovers.JEL Classification: O14, O30, O40, O47     

Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany

Abstract. This paper estimates the impact of interest rate shocks on regional output in Germany over the period from 1970 to 2000. We use a vector autoregression (VAR) model to obtain impulse responses, which reveal differences in the output responses to monetary policy shocks across ten German provinces. Next, we investigate whether these differences can be related to structural features of the regional economies, such as industry mix, firm size, bank size and openness. An additional analysis of the volatility of real GDP growth for the period 1992–2000 includes the Eastern provinces. We also present evidence on the interrelationship between firm size and industry, and compare our measure of firm size with those used in previous studies. We conclude that the differential regional effects of monetary policy are related to industrial composition, but not to firm size or bank size.     

CONSUMPTION GROWTH ACCOUNTING

The methodology in this paper combines an input–output structural decomposition approach with the supply-side perspective of mainstream growth accounting. In explaining the intertemporal change in consumption per worker, three sets of effects are distinguished. First, contributions due to several types of technological changes are considered. Second, effects caused by changes in international trade are discerned. Third, composition effects that reflect structural shifts in demand (including changes in tastes) are quantified. As an empirical illustration, we analyze the developments in the U.K. between 1979 and 1990.     

Externalities of R&D Expenditures

Innovation is generally recognized as a major source of economic growth. R&D investments explicitly aim at generating innovations and creating knowledge. Since knowledge has certain public good properties, positive externalities are likely to exist. In this paper, we extend well-known concepts from the input-output literature (backward multipliers) to indicate at which commodities stimuli should be targeted to enhance R&D and its positive externalities in the economy as a whole. Next, we argue that there may also be negative externalities of R&D, due to increased prices. This issue can be studied by means of forward multipliers. Both concepts are applied to the United States, 1977-90.     

Estimation of demand systems using both time series and cross section data

Summary This article deals with three models of complete systems of demand equations (Rotterdam model, AIDS and CBS model). After the models and the theoretical restrictions have been described the parameters are estimated subject to an increasing number of restrictions and using aggregate time series for the Netherlands on five commodity groups. As the initial results are not altogether satisfactory an attempt is made to improve the estimates by combining the time-series information with cross section data from the Dutch 1974/1975 budget survey. While the revised estimates of the income elasticities are more plausible than the initial ones, the reverse is true for the estimated price elasticities. This paper originated when I was a student of economics at the University of Amsterdam. I am greatly indebted to J.G. Odink who never failed to support and inspire me while I worked on this paper. Also I thank J.S. Cramer, D.A. Kodde and J. van Driel for their comments on an earlier draft, and G. Ridder for his econometric advice. Finally the comments of two anonymous referees are gratefully acknowledged. Of course all remaining errors and omissions are my own.     

Optimal economic growth and non-stable population

Summary This paper analyses optimal economic growth when the (exogenous) rate of population growth changes. The optimal growth path is characterized by a strikingly straightforward generalization of the traditional steady-state Golden Rule of Accumulation. The comparative statics results allow for a generalization of Samuelson's (1975) analysis of the lower-bound for the optimal rate of population growth. It is shown that under plausible assumptions the optimal savings rate follows an inverted U-shaped or U-shaped pattern during periods of demographic transition, according to whether the growth rate of births is falling or rising.