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Technology and empirical dynamics of specialization in open economies

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  • Stolpe, Michael
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    Abstract

    This paper applies Markov chain analysis to examine the empirical dynamics of sectoral specialization in open economies. At issue is here persistence and the hypothesis of hysteresis in national patterns of industrial specialization, often claimed as an implication of strong path dependence in the evolution of high-technologies specific to certain industries. The evidence from twelve OECD member countries' time series of value added in 17 manufacturing industries and from corresponding patent count data does not support the hypothesis of hysteresis based on nationally restricted knowledge spillovers from industrial research and development activities. On the contrary, there seems to be generally lower persistence in patterns of technological specialization than in the corresponding production specialization. Moreover, high persistence in some parts of manufacturing mostly disappears when taking into account changes in countries' relative factor endowments, which form the basis of dynamic comparative advantages. These findings cast doubt on the popular belief that a government can — by making cleverly designed and appropriately timed industrial policy interventions — secure a permanently larger share of certain industries for the national economy which are supposed to lock in first mover advantages in terms of particularly high rates of technological innovation and productivity growth.

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    File URL: http://econstor.eu/bitstream/10419/666/1/043472672.pdf
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    Bibliographic Info

    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 637.

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    Date of creation: 1994
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    Handle: RePEc:kie:kieliw:637

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    1. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
    2. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
    3. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    4. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
    5. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
    6. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
    7. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
    8. Dosi, Giovanni, 1982. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 11(3), pages 147-162, June.
    9. Geweke, John & Marshall, Robert C & Zarkin, Gary A, 1986. "Mobility Indices in Continuous Time Markov Chains," Econometrica, Econometric Society, vol. 54(6), pages 1407-23, November.
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    Cited by:
    1. Redding, Stephen, 2002. "Specialization dynamics," Journal of International Economics, Elsevier, vol. 58(2), pages 299-334, December.

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