Estimating international technology spillovers using technology flow matrices

Estimating International Technology Spillovers Using Technology Flow Matrices. — This paper investigates the impact of international R &; D spillovers on sectoral growth patterns in OECD countries. It applies panel regression techniques to a time-series cross-section panel. It arrives at the conclusion that knowledge spillovers are an important contributor to economic growth. The estimation results are applied in the form of a ‘simulation’ of TFP growth per country, splitting (R &; D-related) TFP into a component due to domestic R &; D and one due to foreign R &; D. The results also show that the United States and Germany are the most influential countries in terms of contributions to other countries’ TFP growth.     

Openness and total factor productivity in Swedish manufacturing, 1980–1995

Openness and Total Factor Productivity in Swedish Manufacturing, 1980–1995. — This paper studies the effect of openness on total factor productivity (TFP) growth. Using industry-level data for Swedish manufacturing from 1980 to 1995, the paper shows that integrated industries tend to be more engaged in R&D and have more entry and exit activity than other industries. The results show that domestic R&D intensity does not contribute to the TFP growth rate. Instead, openness to international markets, which helps facilitate technology spillovers, is an important factor. There is also some evidence that producers exiting the market are less productive, implying that such exits will increase the average productivity of the industry.     

More similar and less equal: Economic growth in the European regions

More Similar and Less Equal: Economic Growth in the European Regions. — This paper examines the growth process of 109 European regions using a new data base. Applying various statistical tools, it concentrates on per capita income and labor productivity. The main results are the following: There has been a clear process of aggregate productivity convergence across the European regions over the 1980s. At the sectoral level, there has not been convergence in agriculture, while the industrial and services sectors show ß-convergence. Most crucially, the regional dispersion in per capita income has remained almost constant so that the differences in wealth conditions of the European citizens are still extremely high.     

Host country competition,labor skills,and technology transfer by multinationals

Host Country Competition, Labor Skills, and Technology Transfer by Multinationals. — This paper examines the impact of local competition and the availability of skilled labor on the technology imports of foreign MNC affiliates in Mexican manufacturing industries. The authors find that proxies for local competition and labor skills are positively related to the recorded technology imports of foreign owned affiliates. The effects of competition appear to be particularly strong in intermediate and consumer goods industries, while the availability of skilled labor seems to be particularly important in durable and capital goods industries. Thus, government policies aiming to create a competitive climate and improve labor quality may also promote inflows of modern technology.     

Does Technology Foster Trade? Empirical Evidence for Developed and Developing Countries

This paper aims to investigate the effects of technology on international trade flows. In order to do so, the authors use a composite index designed to capture the performance of countries concerning technology and human knowledge as a new explanatory variable in an augmented gravity equation estimated for a sample of 62 developed and developing countries. Results show that geographical factors are always relevant, however geographical distance, being landlocked, technological and social factors seem to be more important for the poorest than for the richest countries. Transport infrastructure and technology can be considered as barriers to trade for those countries with lower endowment levels, therefore investing in these variables will increase the participation of the poorest countries in the world economy.The authors would like to thank the participants at the 2004 International Atlantic Economic Conference held in Lisbon and at the VII Encuentro de Economía Aplicada held in Vigo for their useful comments and suggestions. Moreover, the authors acknowledge the support and collaboration of the Instituto Valenciano de Investigaciones Económicas.     

Forecasting the Euro exchange rate using vector error correction models

Forecasting the Euro Exchange Rate Using Vector Error Correction Models. — This paper presents an exchange rate model for the Euro exchange rates of four major currencies, namely the US dollar, the British pound, the Japanese yen and the Swiss franc. The model is based on the monetary approach of exchange rate theory which uses fundamental macroeconomic variables to explain the exchange rate. A crucial point when using such a model is its proper estimation through cointegration analysis. The euro exchange rate model is therefore estimated in the form of a Vector Autoregressive (VAR) model with cointegrating vectors (VECM). We find that when cointegration analysis is undertaken properly, the naive random walk prediction can be out-performed for the US dollar, the British pound and the Japanese yen, but not for the Swiss franc.     

Labor productivity in the United States and the United Kingdom during the nineteenth century

A number of writers have recently questioned whether labor productivity or per capita incomes were ever higher in the United Kingdom than in the United States. This paper focuses on aggregate and sectoral labor productivity in the two countries during the nineteenth century. We build on earlier work by Broadberry to push comparative productivity estimates back to 1840 based on a time series projection from a 1910 benchmark and checked against a benchmark estimate for 1850. The results indicate that labor productivity in agriculture was broadly equal in the two countries, and that the United States had a substantial labor productivity lead in industry as early as 1840, while the United Kingdom was ahead in services. Hence aggregate labor productivity and per capita incomes were higher in the United Kingdom in the mid-nineteenth century, particularly since the United States had a larger share of the labor force in low value-added agriculture and a smaller share of the population in the labor force.     

Democracy and Durability: Empirical Analysis and a Causality Test

The current literature has failed to differentiate between the collapse of democratic and authoritarian rules or whether democratic regimes collapse for the same reasons as do authoritarian regimes. Therefore, the current literature is silent on whether democracies are more fragile or less susceptible to economic and political breakdowns. Using a multitude of political instability variables, this paper explores empirically, whether political freedom and civil liberty (a proxy for democracy) has any effect on the stability of the political order. The empirical results of the paper confirm the hypothesis that democracy is conducive to political stability; the higher the level of political freedom and civil liberty, the more stable countries are. The paper also presented a Granger-causality test of political instability and the level of political freedom and civil liberty. The test results indicate that the level of political freedom and civil liberty Granger-cause the level of political instability, while the level of political instability does not Granger-cause the level of political freedom and civil liberty. The test results indicate that Granger-causality runs one-way from political freedom and civil liberty to political instability and not the other way. A further comprehensive research is needed on the multi-layered and the complex relationship among democracy and the resilience of the political order.I would like to thank an anonymous referee for helpful comments that improved the quality of the paper. I would also like to thank the Research Council of Niagara University for their financial support.     

The response of long-term interest rates to news about monetary policy actions: Empirical evidence for the U.S. and Germany

The Response of Long-Term Interest Rates to News about Monetary Policy Actions. Empirical Evidence for the U.S. and Germany. — The authors reestimate the expectations theory of the term structure focusing on the question of how monetary policy actions indicated by changes in the very short rate affect long-term interest rates. Their main point is that the expectations hypothesis implies that very long rates should only react to unanticipated changes of the very short rate. In contrast to cointegration tests of expectations theory, this implication only requires rational expectations but not stationary risk premia. Therefore, its empirical test sheds new light on the importance of expectations theory for the determinants of the term structure of interest rates.