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Globalization and Productivity in the United States and Germany

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  • Catherine L. Mann

    ()
    (Peterson Institute for International Economics)

Abstract

This paper investigates the impact of globalization on productivity growth and the procyclicality of productivity growth in manufacturing industries in the United States and Germany. For U.S. industries, the analysis suggests that changes in international demand affects productivity growth differently from changes in exposure to international competition. An increase in foreign demand for U.S. exports raises trend productivity growth, but to a lesser degree than does a similar demand shock from domestic buyers. On the other hand, whereas an increase in U.S. imports reduces trend productivity growth of U.S. industries, a loss of market share to imports is associated with gains to productivity growth. For Germany, neither international demand shocks nor exposure to international competition seem to be associated with productivity growth rates, perhaps because German industries experienced a smaller increase in exposure to international competition over the time period. Comparing the U.S. and German results suggests that "going global" may affect productivity growth rates more than simply "being global". As for the procyclical characteristics of productivity growth, the U.S. and German measures evidence different procyclical behavior. For many industries, both U.S. and German labor productivity growth rates exhibit some degree of procyclicality. For German industries, this procyclicality of productivity growth disappears with broader measures of productivity growth that include utilization of capital and intermediates inputs. For U.S. industries, the degree of procyclicality increases when productivity growth is measured on these broader bases. Moreover, in the United States, procyclicality appears to be accentuated by export demand growth and dampened by import demand growth.

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Paper provided by Peterson Institute for International Economics in its series Working Paper Series with number Working Paper Special (1).

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Date of creation: Jan 1997
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Handle: RePEc:iie:wpaper:wps-1

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  1. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  2. Borjas, G.J. & Freeman, R.B. & Katz, L.F., 1991. "On The Labor Market Effects Of Immigration And Trade," Harvard Institute of Economic Research Working Papers 1556, Harvard - Institute of Economic Research.
  3. Borjas, George J & Ramey, Valerie A, 1994. "Time-Series Evidence on the," American Economic Review, American Economic Association, vol. 84(2), pages 10-16, May.
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  5. Burnside, A Craig & Eichenbaum, Martin & Rebelo, Sérgio, 1995. "Capital Utilization and Returns to Scale," CEPR Discussion Papers 1221, C.E.P.R. Discussion Papers.
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  9. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Papers 95-14, California Davis - Institute of Governmental Affairs.
  10. Susanto Basu & John G. Fernald, 1997. "Aggregate productivity and aggregate technology," International Finance Discussion Papers 593, Board of Governors of the Federal Reserve System (U.S.).
  11. Flaig, Gebhard & Steiner, Viktor, 1993. "Searching for the \"productivity slowdown’: some surprising findings from West German manufacturing," Munich Reprints in Economics 20364, University of Munich, Department of Economics.
  12. Stephen Nickell & D Nicolitsas, 1994. "Wages," CEP Discussion Papers dp0219, Centre for Economic Performance, LSE.
  13. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  14. Susanto Basu, 1995. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," NBER Working Papers 5336, National Bureau of Economic Research, Inc.
  15. J. Bradford Jensen & Nathan Musick, 1996. "Trade, Technology, and Plant Performance," Industrial Organization 9603004, EconWPA.
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Cited by:
  1. Charles St-Arnaud, 2004. "Une approche éclectique d'estimation du PIB potentiel pour le Royaume-Uni," Working Papers 04-46, Bank of Canada.

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