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Openness, Efficiency and Technology: An Industry Assessment

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  • Dimitris Christopoulos
  • Peter McAdam

Abstract

Most growth models imply positive impacts on economic growth from greater openness. And a key factor linking openness and growth is the efficiency with which resources are used. Empirically, however, the efficiency impacts of trade have been ambiguous. Using a stochastic frontier analysis, we examine the impact of openness on technical (in)efficiency for a sample of OECD economies. Unlike the bulk of related studies, we work at the industry level. Given recent debates on technology-inspired growth and TFP effects, we additionally examine whether ICT expenditures impacts openness and efficiency. We establish the elasticity of openness with respect to (in)efficiency; TFP and Scale Economies; and Technical Inefficiency across countries and sectors. Both openness and ICT usage have robustly positive impacts on efficiency. Our results shed light on the impact of, spillovers be- tween, and heterogeneity across countries and industries from, increasing openness interacted with the use of advanced technologies.

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Bibliographic Info

Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 60 (2013)
Issue (Month): 1 (02)
Pages: 56-70

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Handle: RePEc:bla:scotjp:v:60:y:2013:i:1:p:56-70

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