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11. Sectoral Productivity Trend: Convergence Islands in Oceans of Divergence

Author:
Fulvio Castellacci, Gaaitzen J. de Vries, and Bart Los
Publication Date:
07-2010
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
In their influential study on productivity growth at the sector-level, Bernard and Jones (1996, BJ) observed convergence of aggregate labor productivity levels in 14 highly developed countries in 1970-1987. They also found evidence that this could be attributed to convergence in services productivity rather than in manufacturing. The main question this paper addresses is whether this result can be generalized to a broader set of countries. Several strands of growth theory suggest that thresholds with regard to a variety of issues can lead to multiple growth regimes, which are likely to lead to very heterogeneous patterns of convergence and divergence. To analyze this, we use econometric techniques that explicitly allow for identification of parameter heterogeneity (quantile regressions and quantile smoothing splines), both with regard to initial conditions and to performance conditional on these initial productivity levels. BJ's data are extended in several dimensions. The recently developed sectoral dataset we use spans the period 1970-2004 and covers 49 countries, including many developing countries. Overall, our findings suggest that convergence as found by BJ only applies to limited groups of country-sectors ('convergence islands'), whereas the biggest parts of our sample spaces can be considered as 'oceans of divergence'.
Topic:
Development, Economics, and Emerging Markets

12. Closing the Technology Gap?

Author:
Fulvio Castellacci
Publication Date:
08-2010
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper focuses on the dimensions shaping the dynamics of technology. We present a model where the knowledge stock of a country grows over time as a function of three main factors: its innovation intensity, its technological infrastructures and its human capital. The latter two variables contribute to determine the absorptive capacity of a country as well as its innovative ability. Based on this theoretical framework, we carry out an empirical analysis that investigates the dynamics of technology in a large sample of developed and developing economies in the last two-decade period, and studies its relationships with the growth of income per capita in a dynamic panel model setting. The results indicate that the cross-country distributions of technological infrastructures and human capital have experienced a process of convergence, whereas the innovative intensity is characterized by increasing polarization between rich and poor economies. Thus, while the conditions for catching up have generally improved, the increasing innovation gap represents a major factor behind the observed differences in income per capita.
Topic:
Development, Economics, Emerging Markets, Science and Technology, and Infrastructure

13. Theoretical Models of Heterogeneity, Growth and Competitiveness

Author:
Fulvio Castellacci
Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper presents a survey of theoretical models of heterogeneity, growth and competitiveness. We compare two main theoretical traditions, evolutionary economics and mainstream heterogeneity models, in order to investigate whether the incorporation of heterogeneous agents has made the recent wave of mainstream models more similar to the evolutionary modelling style and results. The results of our survey exercise can be summarized as follows. On the one hand, we observe some increasing similarities and converging aspects between the evolutionary and the mainstream approaches to the study of heterogeneity. On the other hand, however, there are still some fundamental differences between them, which mainly relate to the distinct set of theoretical assumptions and methodological frameworks in which these heterogeneity models are set up and rooted. In short, the evolutionary approach emphasizes the complexities of the growth process and makes an effort to provide a realistic description of it, whereas the mainstream approach does instead follow a modelling methodology that emphasizes the analytical power and tractability of the formalization, even if that implies a somewhat simplified and less realistic description of the growth process.
Topic:
Development, Economics, Industrial Policy, International Trade and Finance, and Markets

14. Technological Regimes, Schumpeterian Patterns of Innovation and Firm Level Productivity Growth

Author:
Fulvio Castellacci and Jinghai Zheng
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper investigates the relationships between technological regimes and firm-level productivity performance, and it explores how such a relationship differs in different Schumpeterian patterns of innovation. The analysis makes use of a rich dataset containing data on innovation and other economic characteristics of a large representative sample of Norwegian firms in manufacturing and service industries for the period 1998-2004. First, we decompose TFP growth into technical progress and efficiency changes by means of data envelopment analysis. We then estimate an empirical model that relates these two productivity components to the characteristics of technological regimes and a set of other firm-specific factors. The results indicate that: (1) TFP growth has mainly been achieved through technical progress, while technical efficiency has on average decreased; (2) the characteristics of technological regimes are important determinants of firm-level productivity growth, but their impacts on technical progress are different from the effects on efficiency change; (3) the estimated model works differently in the two Schumpeterian regimes. Technical progress has been more dynamic in Schumpeter Mark II industries, while efficiency change has been more important in Schumpeter Mark I markets.
Topic:
Economics and Science and Technology
Political Geography:
Europe and Norway

15. Technology Clubs, Technology Gaps and Growth Trajectories

Author:
Fulvio Castellacci
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper looks at the convergence clubs literature from a Schumpeterian perspective, and it follows the idea that cross-country differences in the ability to innovate and to imitate foreign technologies determine the existence of clustering, polarization and convergence clubs. The study investigates the characteristics of different technology clubs and the growth trajectories that they have followed over time. The cross-country empirical analysis first explores the existence of multiple regimes in the data by means of cluster analysis techniques. It then estimates a technology-gap growth equation in a dynamic panel model specification. The empirical results identify three distinct technology clubs, and show that these are characterized by remarkably different technological characteristics and growth behavior.
Topic:
Development, Economics, International Trade and Finance, and Science and Technology

16. Structural Change and the Growth of Industrial Sectors: Empirical Test of a GPT Model

Author:
Fulvio Castellacci
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper investigates the empirical relevance of a model of structural change and the growth of industrial sectors. The model analyses the process of diffusion of general- purpose technologies (GPTs) and how this affects the dynamic performance of manufacturing and service industries. The empirical analysis studies the dynamics and the determinants of labour productivity growth of a large number of sectors in 18 OECD countries over the period 1970-2005. The results of dynamic panel data and cross-sectional analysis provide support for the empirical validity of the model. Industries that are close to the core of the emerging GPT based on information and communication technologies (ICTs) are characterized by greater innovative capabilities and have recently experienced a more dynamic performance. Relatedly, countries that have been able to shift their industrial structure towards these high-opportunity manufacturing and service industries have grown more rapidly.
Topic:
Development, Economics, Globalization, and Industrial Policy

17. The Internationalization of Firms in the Service Industries: Channels, Determinants and Sectoral Patterns

Author:
Fulvio Castellacci
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper presents the results of a new survey on the international activities of Norwegian enterprises in various service industries. The survey focuses on three main internationalization channels: international sales, international cooperation and R outsourcing. The empirical analysis studies the relevance of these channels, and investigates the related strategies, objectives and determinants. International sales and collaborations emerge as the two most relevant channels, whereas the scope for R outsourcing seems to be far more limited. The analysis of the determinants of international activities suggests three main results: (1) the innovative capability of firms matters for their international performance; (2) the various internationalization channels seem to be complement, rather than substitute, strategies to compete in foreign markets; (3) sectoral specificities greatly affect firms' internationalization strategies and performance.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
Europe