Labor productivity growth: disentangling technology and capital accumulation

How much of the convergence in labor productivity that we observe in manufacturing is due to convergence in technology versus convergence in capital-labor ratios? To shed light on this question, we introduce a nonparametric counterfactual decomposition of labor productivity growth into growth of the capital-labor ratio (K/L), technological productivity (TEP) and total factor productivity (TFP). Our nonparametric specification enables us to model technology allowing for heterogeneity across all relevant dimensions (i.e. countries, sectors and time). Using data spanning from the 1960s to the 2000s, covering 42 OECD and non OECD countries across 11 manufacturing sectors, we find TEP and TFP to account for roughly 46 and ?6% of labor productivity growth respectively, on average. While technological growth at the world level is driven primarily by the US and a handful of other OECD countries, we find strong evidence of convergence in both technology and capital-labor ratios. Interestingly, very few of the usual growth determinants are found to enhance the process of technological catching-up.     

Time-Series Wage Differential in Taiwan: The Role of International Trade

Rising relative wages between skilled and unskilled workers in developed countries has been a popular subject of recent studies. This paper analyzes Taiwan, a semi-developed economy, where the relative wage reveals a declining trend since the mid-1980s. The authors study the role of international trade. A major point of departure is to distinguish the effects of net exports to OECD countries from those to non-OECD countries. The paper also differentiates the effects of net exports to China from those to non-OECD countries except China. It is found that net exports to the OECD countries raise the relative wage of skilled workers, whereas net exports to non-OECD countries and China diminish the relative wage. Moreover, the impacts of net exports to China are much larger than those to OECD and other non-OECD countries. The documented wage effects of international trade in this work diverge from what existing works have argued based on Heckscher–Ohlin theory.     

Testing Growth Convergence with Time Series Data— a non-parametric approach

A non-parametric time series testing is suggested to analyse the convergence of international output per-capita gaps. Non-parametric tests are based on signs and ranks of time series properties of output differences. The methods are applied to logs of USA percapita income differences for 16 OECD countries from 1900-97. In contrast to the results obtained by Bernard & Durlauf (1995) for the period 1900-87, convergence of output gaps was evident for the majority of countries. However, the trends in 1970-97 and 1987-97 are noticeably more complicated than the homogeneous convergence found in the pre-1970 period. The results indicate that widening USA gaps are now more likely to emerge than steady-state or narrowing gaps.     

Technological differences and convergence in the OECD

Abstract. In this paper we test the homogeneity of the technological parameters among OECD countries, which is the maintained hypothesis in most of the empirical growth literature. We first identify differences in the constant term of the convergence equation estimated for the OECD 1960/1990 sample using a fixed- effects estimator. Then we provide a formal test of the homogeneity of technological parameters across groups of countries. We identify at least two different groups within the OECD, with significantly different technologies. Convergence within each group is fast, supporting the notion of club convergence. Nevertheless, the implausible parameter values obtained for the leading technology club casts some doubts on the validity of the Solow model to account for the long run behaviour of this group of countries.     

INTERNATIONAL AND INTERTEMPORAL COMPARISONS OF REAL PRODUCT IN OECD COUNTRIES A GROWTH SENSITIVITY ANALYSIS

This paper provides two new data sets for comparisons of real income in OECD countries. The first set provides adjusted real series for GDP and its components from 1960 to 1993 based on OECD 1990 purchasing power parities. The second set uses OECD PPP of different benchmark years, and interpolates these applying national price indices. Comparisons between both alternatives, Penn World Tahle Mark 5 (PWT 5) and its new version (PWT 5.6), in terms of economic growth and convergence, reveal some remarkable differences. Moreover, there are wider differences concerning the relative countries' position in GDP per capita ranking. Estimations of convergence equations based on OECD data yield a better fit than those obtained using PWT data, although there are also some significant differences between PWT 5 and PWT 5.6. Nevertheless, a very positive result is that other parameters of interest in these equations are not affected by the use of these different data sources.     

Trade-related spillovers and industrial competitiveness: Exploring the linkages for OECD countries

This study examines how trade-related spillovers impact the OECD countries' industrial competitiveness; with an emphasis on China's innovative efforts and reintegration into the global economy. In comparison with the major R&D countries, benefits attributable to spillovers are found to be more sizable for the rest of the OECD countries.This result is consistent with the observed convergence of competitiveness between the two groups of countries during 1990–2009.Moreover, our empirical results suggest China's trade-related spillovers can produce both positive and negative effects on OECD countries' industrial competitiveness. The persistence of the spillover effects is found even after controlling for trade openness creating possible spurious association. Finally, our finding TFP growth as the competitiveness driver stresses the consequential role of STI (science, technology, and innovation) policies in supporting sustainable and balanced growth.     

Technological specialization and economic performance in oecd countries

The paper investigates the growing sectoral specialization in technological activities of OECD countries (measured using patent data) and its impact on countries innovative-and economic performance in the 1975-1990 period. Aggregate indicators of sectoral specialization are introduced, showing the extent to which countries concentrate their innovations in few fields, or spread them across several sectors. A general positive relationship us found between the degree of specializatin in technology and higher rates of growth, while specialization in electronics-related fields in not associated to better economic or technological performances.The position of individual countries in these patterns is also examined, showing that specialization has been an element of the catching-up process of the past decades, which has led to a growing economic convergence among OECD countries.     

The Stochastic Convergence of CO<Subscript>2</Subscript> Emissions: A Long Memory Approach

In response to equity concerns surrounding the spatial distribution of CO₂ emissions and assumptions of CO₂ convergence within some climate models, this paper examines the convergence of CO₂ emissions within the OECD over the period 1870–2004. More specifically, using the Local Whittle estimator and its variants we examine whether relative per capita CO₂ emissions are fractionally integrated, that is they are long memory processes which, although highly persistant, may revert to the mean/trend in the long run. Our results suggest that CO₂ emissions within 13 out of 18 OECD countries are indeed fractionally integrated implying that they converge over time, albeit slowly. Interestingly though, the countries whose emissions are not found to be fractionally integrated are some of the highest polluters within the OECD, at least in per capita terms. Our results have implications both for future studies of CO₂ convergence and for climate policy.     

Convergence of international output Time series evidence for 16 OECD countries

This article examines convergence of per capita output for 16 OECD (Organization for Economic Cooperation and Development) countries. Conventional tests on conditional and time series convergence have given mixed results for similar economies. Utilizing the concepts of deterministic and stochastic convergence, we develop techniques which incorporate endogenously determined break points to test the unit root hypothesis in relative per capita income. The tests provide evidence of deterministic convergence for 10, and stochastic convergence for 14, of the 16 OECD countries. Our findings reveal that World War II is the major cause of the structural shifts in relative output.     

Energy efficiency in transition economies

This article outlines and estimates a measure of underlying efficiency in electricity consumption for an unbalanced panel of 27 transition economies and 6 European OECD countries between 1994 and 2007. A Bayesian Generalized True Random Effects stochastic frontier model with persistent and transient inefficiency is considered by estimating an aggregate electricity demand function that leads to consumption efficiency scores, giving further insights than a simple analysis of energy intensity. There is evidence of convergence between the CIS countries and a block of Eastern European and OECD countries, although other country groups do not follow this tendency, such as the Balkans.     

An evolutionary model of long term cyclical variations of catching up and falling behind

We generalize a single-country model of endogenous growth to the case of a multi-country world economy in which technology transfer and behavioral imitation are the possible means of interaction between countries. The model is evolutionary in the sense that the economies are disaggregated by behaviourally heterogeneous firms, market selection occurs, and the innovation process is uncertain and stochastic. We demonstrate that this structure leads to a complex process of convergence and divergence over time that can be characterized as 1/f noise. Spectral analysis of measures of convergence for six core OECD countries in the period 1870–1989 reveals a similar pattern in the empirical data.     

Do per capita health care expenditures converge among OECD countries? Evidence from unit root tests with level and trend-shifts

This study examines the stochastic conditional convergence of per capita health care expenditures (PCHCE) among 19 OECD countries over the period 1972–2008. Specifically, newly developed LM and RALS-LM unit root tests with allowance for two endogenously determined structural breaks are employed. The results indicate support for PCHCE convergence among most OECD countries. The results are stronger in more general tests that control for two breaks and nonnormal errors. Panel unit root tests provide additional support for the stochastic convergence of PCHCE.     

Convergence of consumption patterns during macroeconomic transition: A model of demand in Ireland and the OECD

This study uses country-level panel data on consumption in Ireland and seven other OECD countries to examine the evolution of Irish consumption patterns as Ireland underwent rapid macroeconomic growth. Consumption levels obviously increased due to substantially higher incomes, but it is less clear how the shares of different types of goods purchased have changed or whether Ireland's consumption mix has converged with that of other high-income countries. Rankings based on a simple distance measure of consumption similarity suggest that Ireland moved from a “low-income” pattern similar to Portugal or Greece to a “high-income” pattern like that of Canada between 1995 and 2003. Using static and dynamic Almost Ideal Demand System models, we first estimate long- and short-run Irish price and income elasticities for nine categories of commodities between 1976 and 2003. These results provide evidence of substantial habit formation in aggregate consumption. We then estimate a long-run cross-country model covering six aggregate commodity groups between 1975 and 2003. The analysis shows that Ireland's demand parameters remain more similar to those of Greece than to higher-income OECD countries in the sample. Although Ireland has overtaken most other OECD countries in per capita income, it is still converging to a higher-income consumption pattern. We foresee further convergence of Irish expenditure patterns towards a pattern typical of high-income countries.     

Structural Change in OECD Export Specialisation Patterns: de-specialisation and ‘stickiness’

This paper examines whether the OECD countries are characterised by a high degree of stability of their export specialisation patterns at the country level or not. Furthermore, we test whether the countries have become more or less specialised. In this context we distinguish between specialisation (or de-specialisation) in trade patterns on the one hand, and divergence (or, on the contrary, convergence) on the other. A specialisation process refers to a process in which specialisation intra-country becomes more dispersed (and counter-wise for de-specialisation). In contrast, a divergence process refers to a process in which countries become more different in terms of specialisation in a particular sector, across countries (and counter-wise for convergence). We examine the sensitivity for the level of aggregation, and we apply a period of nearly three decades from 1965 to 1992. Twenty OECD countries are considered. The intra-country results show that the national specialisation patterns are rather sticky, although there is a tendency for countries to de-specialise in the medium to long term. The sector-wise results display convergence both in terms of β-and σ-convergence. In conclusion, we discuss the results (de-specialisation in particular) in the context of economic integration, and furthermore we contrast the findings with similar exercises conducted on structural change in technological specialisation.     

International Consumption Patterns among High‐income Countries: Evidence from the OECD Data*

This paper examines the effect of economic integration on the product‐level consumption patterns across the OECD in the past decade. Estimation results find evidence of strong convergence in cross‐country consumption patterns with substantial heterogeneity across products and countries. The results are robust to either the benchmark choice, data selection, or the choice of model specification. In addition to documenting convergence, the paper relates the volume of international trade to cross‐country consumption patterns.     

Convergence in per capita health expenditures and health outcomes in the OECD countries

Our analysis of 19 Organization for Economic Co-operation and Development (OECD) countries over the period 1972 to 2006 provides evidence of convergence in per capita health care expenditures for 17 countries, while the US and (to a lesser degree) Norway follow a different path. A simple decomposition of per capita health expenditures reveals that the divergence of the US comes from the divergence of the ‘ratio of health care expenditures to Gross Domestic Product (GDP)’ component, while Norway's divergence is mainly caused by the ‘labour productivity’ component. Interestingly, our results suggest that convergence in per capita health expenditures among the 17 OECD countries does not lead to convergence in health outcomes. Finally, we extend our analysis to examine convergence in various determinants of health expenditures.     

The Decline of Schooling Productivity in OECD Countries

Based on Baumol's cost-disease model, we develop two alternative measures of the change in the productivity of schooling. Both productivity measures are based on changes in the relative price of schooling. We find that in most OECD countries the price of schooling has increased faster in 1970–94 than would be compatible with constant schooling productivity. In addition, we show that the average performance of pupils has remained constant at best in most OECD countries. Our results imply a larger decline in the productivity of schooling in many OECD countries than in the United States.     

Economic Growth, TFP Convergence and the World Export of Ideas: A Century of Evidence

This paper examines the effect of international patent stock on total factor productivity for 16 OECD countries over the past 120 years. The results show that the international patent stock is highly influential for economic growth and, together with knowledge spillovers through the channel of imports, has contributed significantly to TFP growth and σ‐convergence among the OECD countries over the past 120 years.     

Trade Policy and Productivity Growth in OECD Manufacturing *

Trade liberalization may promote economic growth in a number of ways, including by accelerating the rate of technological change. Firms that face more intense import competition may be spurred to greater rates of innovation; firms which export may absorb new technologies through their contact with international markets. This paper examines evidence on trade policy and productivity growth for a sample of thirteen OECD countries and including eighteen manufacturing sectors, using data primarily from the 1980s. Within individual sectors, there are strong productivity convergence effects within the OECD. After controlling for convergence, we find a positive association between high rates of productivity growth and low tariffs, and between high productivity growth and strong export performance. We found no particular association between high productivity growth and import penetration. The results are consistent with the possibility of positive linkages between trade liberalization and accelerated productivity growth. [F1, O4]