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The Manufacturing Sector Did Contribute to Convergence Among the OECD Countries

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Author Info
Wei-Kang WONG ()

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Abstract

This paper revisits the role of sectors in aggregate convergence. The existing evidence is inconclusive because its methodology depends sensitively on the conversion factor used to compare sectoral productivity levels across countries. This paper proposes a robust methodology -- ß-decomposition - to directly estimate how much the productivity growth in each sector and between -sector restructuring contribute to convergence. This methodology avoids the sectoral PPP-conversion-factor problem because it compares only sectoral growth rates and shares -- not levels -- across countries. The evidence suggests that productivity growth in both manufacturing and services were important in driving aggregate productivity convergence among the OECD countries. The results are robust to the choice of base year.

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File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0215.pdf
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Publisher Info
Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0215.

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Length: 30 pages
Date of creation: Oct 2002
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Handle: RePEc:nus:nusewp:wp0215

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Related research
Keywords: Convergence ß-Decomposition Shift-Share Decomposition Sectoral Decomposition

Find related papers by JEL classification:
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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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    Other versions:
  3. Andrew B. Bernard & Charles I. Jones, 2001. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries: Reply," American Economic Review, American Economic Association, vol. 91(4), pages 1168-1169, September. [Downloadable!] (restricted)
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    Other versions:
  5. Martin Neil Baily & Eric J. Bartelsman & John Haltiwanger, 1994. "Downsizing and Productivity Growth: Myth or Reality?," NBER Working Papers 4741, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Eric J. Bartelsman & Mark Doms, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September. [Downloadable!] (restricted)
    Other versions:
  7. Jeffrey A. Frankel & David Romer, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June. [Downloadable!] (restricted)
  8. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-38, December. [Downloadable!] (restricted)
  9. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity across Industries and Countries: Time Series Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 135-46, February. [Downloadable!] (restricted)
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  10. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May. [Downloadable!] (restricted)
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  11. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April. [Downloadable!] (restricted)
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  12. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," IMF Working Papers 93/84, International Monetary Fund.
    Other versions:
  13. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity and Convergence across U.S. States and Industries," Empirical Economics, Springer, vol. 21(1), pages 113-35.
  14. Barro, Robert J & Sala-i-Martin, Xavier, 1997. " Technological Diffusion, Convergence, and Growth," Journal of Economic Growth, Springer, vol. 2(1), pages 1-26, March. [Downloadable!] (restricted)
    Other versions:
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