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Detecting Technological Catch-Up in Economic Convergence

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  • F. Pigliaru

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Abstract

Our aim is to address the problem of measuring how much of the convergence that we observe is due to convergence in technology versus convergence in capital-labour ratios, in the absence of data on the level of technology. To this aim, we first develop a growth model where technology accumulation in lagging economies depends on their propensity to innovate and on technological spillovers, and convergence is due both to capital deepening and to catch-up. We study the transitional dynamics of the model to show how to discriminate empirically among the following three hypotheses - (i) convergence due to capital deepening with technology levels uniform across economies, as in Mankiw, Romer and Weil (1992); (ii) convergence due to capital deepening with stationary differences in individual technologies, as in Islam (1995); (iii) convergence due to both catch-up and capital deepening (non-stationary differences in individual technologies. We show that, in the absence of TFP data, hypotheses (ii) and (iii) may be difficult to distinguish in cross-section or panel data. We suggest that discrimination can be nevertheless obtained by exploiting the fact that if heterogeneity is the source of catch-up, technology growth is not uniform across countries and the initial differences in technology levels may tend to decrease over time. Given this implication, one way to discriminate between (ii) and (iii) would be to test whether estimates of fixed-effects in sub-periods show the pattern implied by either hypothesis.

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Bibliographic Info

Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 199902.

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Date of creation: 1999
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Handle: RePEc:cns:cnscwp:199902

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References

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  1. Bernard, Andrew B & Jones, Charles I, 1996. "Technology and Convergence," Economic Journal, Royal Economic Society, vol. 106(437), pages 1037-44, July.
  2. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  3. Charles I. Jones, . "Convergence Revisited," Working Papers 96006, Stanford University, Department of Economics.
  4. Jan Fagerberg & Bart Verspagen & Marjolein Cani�ls, 1997. "Technology, Growth and Unemployment across European Regions," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 457-466.
  5. Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
  6. Barro, Robert J. & Sala-i-Martin, Xavier, 1995. "Technological Diffusion, Convergence and Growth," CEPR Discussion Papers 1255, C.E.P.R. Discussion Papers.
  7. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  8. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  9. Nazrul Islam, 1998. "Growth Empirics: A Panel Data Approach- A Reply," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 325-329, February.
  10. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  11. Maurizio Pugno, 1993. "On Competing Theories of Economic Growth: a Cross-country Evidence," Department of Economics Working Papers 9309, Department of Economics, University of Trento, Italia.
  12. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  13. Kevin Lee & M. Hashem Pesaran & Ron Smith, 1998. "Growth Empirics: A Panel Data Approach- A Comment," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 319-323, February.
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Citations

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Cited by:
  1. Alexiadis, Stilianos & Tomkins, Judith, 2010. "Technology adoption and club convergence," MPRA Paper 21260, University Library of Munich, Germany.
  2. M. Musumeci, 2000. "Innovazione tecnologica e beni culturali. Uno studio sulla situazione della Sicilia," Working Paper CRENoS 200008, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  3. R. Naylor, 2001. "Firm profits and the number of firms under unionised oligopoly," Working Paper CRENoS 200109, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  4. Hartwig, Jochen, 2012. "Testing the growth effects of structural change," Structural Change and Economic Dynamics, Elsevier, vol. 23(1), pages 11-24.
  5. R. Carcangiu & G. Sistu & S. Usai, 1999. "Struttura socio-economica dei comuni della Sardegna. Suggerimenti da un’analisi cluster," Working Paper CRENoS 199903, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  6. R. Naylor, 2001. "Industry profits and market size under bilateral oligopoly," Working Paper CRENoS 200108, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  7. Adriana Di Liberto & Francesco Pigliaru & Roberto Mura, 2008. "How to measure the unobservable: a panel technique for the analysis of TFP convergence," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 343-368, April.
  8. Palan, Nicole & Schmiedeberg, Claudia, 2010. "Structural convergence of European countries," Structural Change and Economic Dynamics, Elsevier, vol. 21(2), pages 85-100, May.
  9. Silvia Dal Bianco, 2010. "Technology Diffusion or Capital Accumulation? An Empirical Assessment of Convergence in Manufacturing," Quaderni di Dipartimento 114, University of Pavia, Department of Economics and Quantitative Methods.
  10. R. Paci & F. Pigliaru, 2001. "Technological Diffusion, Spatial Spillovers And Regional Convergence In Europe," Working Paper CRENoS 200101, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  11. C. Antonelli & R. Marchionatti & S. Usai, 2000. "Productivity and External Knowledge: The Italian Case," Working Paper CRENoS 200009, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  12. repec:hrs:journl:v:3:y:2011:i:2:p:45-59 is not listed on IDEAS
  13. Höhenberger, Nicole & Schmiedeberg, Claudia, 2008. "Structural convergence of European countries," Center for European, Governance and Economic Development Research Discussion Papers 75, University of Goettingen, Department of Economics.
  14. LR. Keller & E. Strazzera, 2000. "Examining predictive models among discounting models," Working Paper CRENoS 200005, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  15. Alexiadis Stilianos & Christos Ap. LADIAS, 2011. "Optimal Allocation Of Investment And Regional Disparities," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 45-59, December.

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