Exports,Imports and Productivity: Results from Indonesian Establishment Data

Using detailed micro data from the Indonesian manufacturing sector we examine whether participation in international trade affects establishments' productivity. Establishments participating in exports or imports have relatively high levels of productivity. Furthermore, the results suggest that establishments engaged only in exports have shown comparable high productivity growth. The larger the share of an establishment's output that is exported, the higher its productivity growth. The results concerning the effect of imports on productivity growth are mixed.     

ETHNIC BUSINESS AND ECONOMIC EMPOWERMENT: THE AFRIKANER CASE, 1915‐1970

The struggle for racial or ethnic group worth is an important socio‐political issue in societies where a minority ethnic group, like the English‐speaking whites in South Africa or the Chinese in Malaysia, dominates the economy but not the political system. There are two routes to the empowerment of an economically backward group. In the Afrikaner case, economic mobilisation formed part of a general ethnic mobilisation. While the Afrikaner‐controlled state after 1948 massively aided all whites, Afrikaner business increased its market share through serving a niche market. It received little ethnic patronage from the state or assistance from English corporations. A quite different from of advancement is that driven by the state, which imposes on large corporations the obligation to promote the economic empowerment of a racial group. While the first form facilitated the rise of the ethnic group as a whole, the latter one benefited mainly a business and middle class elite that may remain dependent on continuing state support.     

Macroeconomic and Sectoral Effects of International Trade: A Vector Error-Correction Study

This study examines various claims that in the U.S., international trade has contributed to a loss of manufacturing base, an increased gap between unskilled and skilled wages, lower employment, and a loss of productivity. Cointegration tests indicate that in the long run and at the macro level, the ratio of trade to output and FDI to output are correlated with the manufacturing share of output, the ratio of unskilled to skilled wages, labor productivity, and the employment rate. However, Granger causality tests reveal that, with one exception, causation does not run from trade to the domestic variables, the only exception being that FDI Granger causes productivity. When the focus is shifted to the manufacturing sector, the results support the proposition that openness to trade has had adverse effects on this sector.A slightly different version of this paper was presented at the Fifty-sixth International Atlantic Economic Conference, October 16–19, 2003 in Quebec City, Canada. The research reported in this paper is partially funded by a grant from the Institute for Global Economic Affairs at Marquette University.     

Labour's share in twentieth-century Sweden: a reinterpretation

The distribution of national income between capital and labour is a classical theme in political economy. This paper takes a long-run perspective to the issue and asks two questions: How did the distribution of income between capital and labour develop in Sweden from 1900 to 2000? And how can this development best be explained? It is shown that labour's share in Sweden in the 100 years from 1900 to 2000 saw three important shifts, and the three shifts are analyzed. Around 1920, there was a surge in labour's share as workers mobilised in trade unions and universal suffrage and the eight-hour working day in manufacturing strengthened the bargaining power of workers. From 1950 until the late 1970s, there was another period of an increasing labour share, when the welfare state expanded and trade unions were strong. Contra the well-known postwar wage moderation analysis, there was no wage moderation in Sweden during the 1950s and 1960s, but rather the opposite: wages increased faster than productivity which caused a redistribution from capital to labour and reduced income inequality. The third shift occurred around 1980 when labour's share started a continuous decrease, beginning with several devaluations intended to increase profitability and competitiveness of Swedish business.     

‘FORGING,AHEAD’: INDUSTRY AND ENVIRONMENTAL TRANSFORMATION IN A MELBOURNE SUBURB 1906–85

The trajectory of the suburb Sunshine in Western Melbourne (1906–85), from industrial powerhouse to repository of social problems, sheds light on the issues surrounding organic urban expansion. For the many Australians living on the fringes of large cities, a sense of deprivation – particularly inequality in services – undercut the presumed comfort and stability of the post‐war period. Unrest in outer areas deepened following the contraction of the ‘long boom’. The area's pre‐Second World War origins as a manufacturing suburb regulated by the industrialist Hugh V. McKay is starkly contrasted with its later incarnation as a site of industrial and suburban sprawl.     

Biased Technological Change and Japanese Manufacturing Employment

This paper examines the effect of technological change on the demand for production and nonproduction workers of the Japanese manufacturing industries since the 1980s. First, a decomposition of the change in the share of nonproduction workers in total employment into between-industry shifts and within-industry shifts reveals that the within-industry shifts were dominant in the 1980s. Second, cross-sectional regressions show that investment in computers has had a significant impact on increasing the share of the wage-bill held by nonproduction workers. These findings suggest that skill-biased technological change is at work in Japanese manufacturing industries. J. Japan. Int. Econ., September 2001, 15(3), pp. 298–322. Development Bank of Japan, 1-9-3 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan. Copyright 2001 Academic Press.Journal of Economic Literature Classification Numbers: J23, J31, O30.     

Innovation and Firm‐Level Productivity: Evidence from Bangladesh

In this paper, the labor productivity impact of manufacturing firms’ innovation in Bangladesh, a region which has, to date, been understudied in this respect, is examined through World Bank Enterprise Survey data from 2003 to 2006. We apply the Cobb–Douglas production function, augmented with innovation‐related inputs (and other expected sources of productivity) in a simultaneous three‐equation system connecting R&D to its determinants, innovation output to R&D, and productivity to innovation output; and in a two‐equation system connecting innovation output to its determinants and productivity to innovation output. Our results reveal that Bangladeshi firms’ process innovation is an important factor for their labor productivity, whereas the significant effect of product innovation is not clearly established.     

RAINFALL, THE MÉLINE TARIFF, AND WHEAT PRODUCTION IN MEDITERRANEAN FRANCE, 1885–1914

Wheat production stagnated in France during the late nineteenth and early twentieth century, while cultivated acreage and wheat output declined sharply around the Mediterranean from the 1870s. Wheat output never recovered in this region despite the introduction in 1885 of tariff measures, such as the 1892 Méline Tariff. This paper analyses the response of Mediterranean wheat growers to changes in local rainfall and to variations of the duty on imported grains. It uses regional level data for nine administrative divisions located on or near the Mediterranean and assesses the impact of rainfall on yields. It argues that an interplay of protectionist policies and environmental conditions explain the decline of wheat production.     

Foreign direct investment, processing trade, and the sophistication of China's exports

China's export structure has shown a rapid shift towards more sophisticated industries. While some believe that this trend is a result of processing trade and foreign direct investment, the evidence is mixed. This paper examines variations in level of export sophistication across China's manufacturing industries. We find that an industry's level of export sophistication is positively related to the share of wholly foreign owned enterprises from OECD countries and the share of processing exports of foreign-invested enterprises, and negatively related to the share of processing exports of indigenous Chinese enterprises. Evidence from the relative export prices of Chinese goods, which measure within-product export sophistication, shows a similar pattern.     

THE SPEED OF STRUCTURAL CONVERGENCE IN THE MANUFACTURING INDUSTRIES OF NEWLY INDUSTRIALISING ECONOMIES

We seek to identify the determinants of the speed of convergence in the structures of manufacturing to their steady-state levels as developing economies become fully industrialised. Applying a two-stage sequential estimation procedure to data on three-digit manufacturing industries for 45 mostly middle-income countries, we find empirical support for the hypothesis that production efficiency is a major determinant of inter-branch output share adjustment. This finding applies to many but not all industries. One implication for latecomers is that industrial policy must aim at rapid diffusion of core technologies to facilitate the acquisition of industrial capabilities in a diversified basket of exportables.     

Value,Structure and Spatial Distribution of Interprovincial Trade in China

This study uses two different datasets to explore the stylized facts of interprovincial trade in China during the recent two decades. One dataset provides the magnitude of bilateral interprovincial goods trade calculated using firms' value‐added tax invoices. The other supplies estimates of interprovincial trade using provincial input–output tables. We find that China has both a large value and a high growth rate of interprovincial trade, but there still exists a home bias in internal trade for most provinces. In addition, disaggregation by product shows that the manufacturing sector has the largest share of interprovincial trade and this share continues to grow. Finally, the spatial distribution of trade suggests that all provinces can be clustered into a smaller number of trade areas with large intra‐cluster trade. Therefore, China's central government should make more effort to reduce local protection, stimulate domestic demand and coordinate interregional trade among local jurisdictions.     

Indonesian Manufacturing Sector Output and Productivity: An Australian Comparative Perspective, 1975–90

This paper provides industry-of-origin comparative estimates of real output and labour productivity in the Indonesian and Australian manufacturing sectors. It makes binary comparisons for the benchmark year 1987, and extrapolates the 1987 benchmark backward and forward using national time series, to derive comparisons for the years 1975–90. Expressed in ‘purchasing power parities’ (PPPs), the gross value of output and value added in Indonesian manufacturing in 1987 was 40% and 34% of the respective Australian levels. In 1987 the Indonesian manufacturing price level was 74% of the Australian level, and Indonesian manufacturing labour productivity was 16% of that in Australia. 1975 to 1990 was a period of catch-up. The Indonesian manufacturing price level declined from 105% to 60% of the Australian level, while labour productivity increased from 12% to 17% of the Australian level. The catch-up was greater from the early 1980s onwards.     

Work and Wages at a Melbourne Factory,the Guest Biscuit Works 1870–1921

The story of wages in nineteenth‐ and early twentieth‐century Australia has largely been told through official published statistics and the experiences of skilled artisans and construction labourers. Utilising wage book data from an early successful manufacturing plant – a biscuit factory – we reveal the earning histories of several neglected groups of Australian workers. We specifically investigate the effects of the 1890s depression, the introduction of a wages board, and shifting demographics on the wages of unskilled factory hands, women, juvenile workers, and commercial clerks. We demonstrate that typical Australian wage series studies have misinterpreted the impact of these phenomena.     

Servicification of investment and structural transformation: The case of China

Structural transformation is a key feature of economic development. Traditional literature attributes it to changes in the sectoral composition of consumption. Different from it, we argue that “servicification” of investment goods, induced by investment-composition technological change, becomes an increasingly important reason for structural transformation, particularly for the rise of the services economy. Our study of the input output tables finds that the share of service inputs in investment goods has grown significantly in many countries since the 1980s, especially for investment-intensive economies such as China. To assess if the investment channel is quantitatively significant, we build a standard model with three broad sectors, but instead add an investment production function employing factors from all three sectors. Moreover, we incorporate investment-composition technological change by allowing the productivities of the three sectoral inputs to evolve over time. We calibrate the model to the Chinese economy from 1981 to 2014 and perform counter-factual experiments accordingly. We find that investment-composition technological change accounts for 33.1% decline in employment share of agriculture, 36.0% increase in employment share of manufacturing and 31.5% increase in employment share of services over the period. The magnitude of this effect on the share of services keeps growing, particularly after 2000. Our findings are not unique for China, but also apply to other economies experiencing the “servicification” of investment.     

Changing economic geography and vertical linkages in Japan

In Japan, the manufacturing has become geographically dispersed in the 1990s, when the import share has risen after the historic exchange rate appreciation. As is consistent with the interpretation that import penetration undermines regional input–output linkages, our regressions detect the significant decline of industrial concentrations previously established near output absorbers, especially in industries with high import share growths. This paper also finds that local knowledge spillovers and immobile specialized labor affect regional growth. Thus, while regional demand of tradable outputs matters less, regional supply of inputs, especially non-tradable inputs, remains critical for manufacturing locations. J. Japanese Int. Economies 17 (4) (2003) 561–581.     

On budgetary policies, growth, and external deficits in an interdependent world

We investigate the effects of budgetary policies in a two-country model of overlapping generations and endogenous growth. In the presence of capital mobility, endogenous growth rates are equalized, but output levels do not converge. A worldwide rise in the public debt to GDP ratio or the share of government consumption reduces savings and growth. A relative rise in one country's debt to GDP ratio or its GDP share of government consumption results in a fall in external assets and its relative savings rate. In the short run, the fall in the savings rate is higher, and the country experiences higher current account deficits as a percentage of GDP.     

Import Source Reallocation and U.S. Manufacturing Employment, 1972–2001

Examining the US manufacturing sector, we focus on the potential employment effects of shifts in import sources from relatively high- to low-income nations. Data for 384 6-digit NAICS US manufacturing industries that span the years 1972–2001 are utilized. Increased import penetration is found to reduce both production and non-production employment; however, such job loss is countered by export-led job creation. Extending the literature, we report that reallocation of import sources from high- to low-income nations reduces manufacturing employment, and when shifts in import sources coincide with rising import penetration the result is an acceleration of job loss. I wish to thank the editor and the two anonymous referees for their valuable comments and suggestions.     

Korea's first industrial revolution, 1911–1940

We estimate output and population of colonial Korea to show that per capita output grew 2.3% with population expanding 1.3% per year from 1911 to 1940. Growth accounting indicated that productivity advance accounted for roughly one half of the per capita output growth. Primary production as a share of GDP fell from 69% to 42% during the period. Rapid productivity improvement caused nontradable sectors to become increasingly important, while capital accumulation drove industrialization. Demographic expansion, per capita output growth, and structural change occurred at considerably faster rates in northern than in southern provinces.     

The factor income distribution in China: 1978–2007

This paper investigates changes in aggregate labor share in China during 1978 and 2007 with a particular focus on the 1995–2007 period during which official statistics report a drop of 12.45 percentage points in labor's share of national income (labor share). Our main findings are: (1) The reported fall in aggregate labor share is overstated. According to the official statistics released by the NBS (2007a), the labor share fell 5.25 percentage points from 2003 to 2004. However this dramatic decline, 42.16% of the total reported decline of the labor share from 1995 to 2007, is completely due to the changes in the way NBS break down the operating surplus state-owned and collective-owned farms and the mixed income of the owners of individual economy; (2) For the last three decades, two main forces have been driving shifts in the aggregate labor share: (i) structural transformation between the agriculture and non-agriculture sectors and (ii) shifts in the labor share within the industry sector; (3) From 1995 to 2003, these two effects are both negative and together drive down aggregate labor share by 5.48 percentage points. The structural change explains 61.31% of the decline and the remaining 38.69% of the decline is due to the changes in the labor share within sectors, primarily in the industry sector; (4) Labor share in agriculture is lower than labor share in services. Therefore, when the service sector grows relative to the agriculture sector in the economy, the aggregate labor share of income declines; and (5) Restructuring of the SOEs and expanded monopoly power are the main reasons for the decline of labor share within industry after 1998. Relative price shifts, the factor input ratio, and biased technological progress are all insignificant forces for this decline because the substitution between factors in the industry sector is nearly unit elastic.     

China,Like the US,Faces Challenges in Achieving Inclusive Growth through Manufacturing

For more than three decades the goal of becoming “the factory of the world” has been at the core of China's development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, has made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China's competitiveness in the most labor‐intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value‐added production domestically. Chinese domestic spending has shifted away from investment toward consumption as citizens' income has grown. Like Americans, Chinese are also spending more on services than on manufactured goods. All of these changes are fundamentally altering the structure of China's production, reducing the role of manufacturing and increasing the skill levels of workers in manufacturing. This paper reviews the challenges posed by these developments for China's long‐term goal of achieving more inclusive growth. It presents evidence that the commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following a pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.