Several types of theoretical literature on the topic of trade, growth and specialisation, including neoclassical approaches, post-Keynesian literature and some models in evolutionary economics, have shown that it is possible enjoy higher rates of economic growth, given the presence of certain sectors in the economy, being it high-tech or fast-growing sectors. This paper investigates these propositions empirically. Basically the idea is to conduct a constant market share (CMS) analysis, and afterwards include the obtained effects in regression models, using panel data techniques in explaining aggregate economic growth. The results display that the fixed effects model is the most appropriate technique, and that using this tool, the initial level of income (the catch up variable) is significant and has a negative sign as expected. The investment (growth of the capital stock) variable is also significant, while the growth adaptation effect (measuring whether the country in question has actively (more than the average country) moved into slow or fast growing sectors) is the only significant variable (positive sign) of the CMS effects. Hence, it is concluded that a certain dynamism in terms of structural change is required by countries in order to achieve high levels of economic growth at the macro level. The final part of the paper deals with the question of whether the fast-growing sectors (as measured in the CMS analysis) are high-tech or not. Based on a comparison between the OECD growth vector from the CMS analysis, on the one hand, and R&D intensities in the 22 sectors (for the 1970s and for the 1980s), on the other, it is concluded that the fast-growing sectors are in general also high-tech sectors.
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Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number
98-25.
Find related papers by JEL classification: C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data F14 - International Economics - - Trade - - - Country and Industry Studies of Trade O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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