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Product variety and technical change

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  • Frensch, Richard
  • Gaucaite Wittich, Vitalija

Abstract

Motivated by growth models based on the variety of capital goods, recent empirical studies have established links between productivity and several trade-based measures of product variety, carrying the implication that these measures may represent technology. We study this implication by explicitly proposing the variety of capital goods available for production as a direct measure of the state of technology. Within a simple growth and development framework, we derive a 'conditional technological convergence' hypothesis on how this variety should behave if it were indeed to represent the state of technology. The hypothesis is tested with highly disaggregated trade data, using tools from the income convergence literature. The results suggest that a trade-based count measure of the variety of available capital goods, allowing for product differentiation by country of origin, indeed behaves 'as if' it represented technology when change of technology is understood as a learning process, and that there is conditional technological convergence among our panel of mainly OECD and transition economies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 88 (2009)
Issue (Month): 2 (March)
Pages: 242-257

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Handle: RePEc:eee:deveco:v:88:y:2009:i:2:p:242-257

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Product variety Diffusion Adoption Technical change;

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References

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Citations

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Cited by:
  1. Katharina Eck, 2010. "(Wie) Führt Außenhandel zu Wirtschaftswachstum?," Working Papers 284, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  2. Richard Frensch & Jan Hanousek & Evžen Kočenda, 2012. "Incomplete specialization and offshoring across Europe," Working Papers 321, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  3. Jan Van Hove, 2010. "Variety and quality in intra-European manufacturing trade: the impact of innovation and technological spillovers," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(1), pages 43-59.
  4. Venturini, Francesco, 2012. "Looking into the black box of Schumpeterian growth theories: An empirical assessment of R&D races," European Economic Review, Elsevier, vol. 56(8), pages 1530-1545.
  5. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.
  6. Frensch, Richard & Schmillen, Achim, 2011. "Can we identify Balassa-Samuelson effects with measures of product variety?," Economic Systems, Elsevier, vol. 35(1), pages 98-108, March.
  7. Goran Petrevski & Jane Bogoev & Bruno S. Sergi, 2012. "The link between central bank independence and inflation in Central and Eastern Europe: are the results sensitive to endogeneity issue omitted dynamics and subjectivity bias?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 34(4), pages 611-652, July.
  8. Lee, Jim, 2011. "Export specialization and economic growth around the world," Economic Systems, Elsevier, vol. 35(1), pages 45-63, March.
  9. Pavla NIKOLOVOVÁ, 2013. "Sourcing Patterns of FDI Activity and Their Impact on the Domestic Economy," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(3), pages 288-302, July.
  10. Madsen, Jakob B. & Saxena, Shishir & Ang, James B., 2010. "The Indian growth miracle and endogenous growth," Journal of Development Economics, Elsevier, vol. 93(1), pages 37-48, September.
  11. Pavla Nikolovova, 2012. "The Impact of FDI on the Host Economy," CERGE-EI Working Papers wp471, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  12. Richard Frensch, 2008. "Trade liberalisation, adoption costs, and import margins in CEEC and OECD trade," Working Papers 269, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  13. Jan Hanousek & Evžen Kočenda, 2013. "Factors of trade in Europe," Working Papers 333, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  14. Richard Frensch & Jan Hanousek & Evžen Kočenda, 2013. "Incomplete Specialization and Trade in Parts and Components," William Davidson Institute Working Papers Series wp1044, William Davidson Institute at the University of Michigan.

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