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Why did UK manufacturing productivity growth slow down in the 1970s and speed up in the 1980s

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  • Gavin Cameron

Abstract

After a dramatic slowdown of the 1970s, productivity growth in UK manufacturing in the 1980s returned to something like its pre-slowdown trend. This paper constructs a quarterly dynamic model of TFP growth in UK manufacturing using cointegration techniques, correcting for a variety of measurement biases. The elasticity of output with respect to R&D capital is estimated at between 0.2 and 0.3, with human capital also playing a positive and significant role. The paper also determines how much of the UK productivity slowdown in the 1970s was due to the mis-measurement of output and the business cycle and how much was due to structural changes. The answer appears to be about half and half.

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File URL: http://www.nuff.ox.ac.uk/economics/papers/1999/w24/CH3.pdf
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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 1999-W24.

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Date of creation: 01 Aug 1999
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Handle: RePEc:oxf:wpaper:1999-w24

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Related research

Keywords: Innovation; Human Capital; Economic Growth; Total Factor Productivity; Unionization; Cointegration Analysis;

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  1. Gavin Cameron & James Proudman & Stephen Redding, 1997. "Deconstructing Growth in UK Manufacturing," Bank of England working papers 73, Bank of England.
  2. Gavin Cameron, 1996. "On the measurement of real R&D: Divisia price indices for UK business enterprise R&D," Research Evaluation, Oxford University Press, vol. 6(3), pages 215-219, December.
  3. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-30, April.
  4. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  6. Muellbauer, John, 1984. "Aggregate Production Functions and Productivity Measurement: A New Look," CEPR Discussion Papers 34, C.E.P.R. Discussion Papers.
  7. Machin, Steve, 1994. "Changes in the Relative Demand for Skills in the UK Labour Market," CEPR Discussion Papers 952, C.E.P.R. Discussion Papers.
  8. Denny, Kevin & Nickell, Stephen J, 1992. "Unions and Investment in British Industry," Economic Journal, Royal Economic Society, vol. 102(413), pages 874-87, July.
  9. Muellbauer, John, 1991. "Productivity and Competitiveness," Oxford Review of Economic Policy, Oxford University Press, vol. 7(3), pages 99-117, Autumn.
  10. Haskel, Jonathan, 1999. "Small Firms, Contracting-Out, Computers and Wage Inequality: Evidence from UK Manufacturing," Economica, London School of Economics and Political Science, vol. 66(261), pages 1-21, February.
  11. G Cameron & J Proudman & Stephen Redding, 1999. "Productivity Growth, Convergence, and Trade in a Panel of Manufacturing Industries," CEP Discussion Papers dp0428, Centre for Economic Performance, LSE.
  12. Ulph, A. M. & Ulph, D. T., 1994. "Labour markets and innovation: Ex-post bargaining," European Economic Review, Elsevier, vol. 38(1), pages 195-210, January.
  13. Mansfield, Edwin, 1985. "How Rapidly Does New Industrial Technology Leak Out?," Journal of Industrial Economics, Wiley Blackwell, vol. 34(2), pages 217-23, December.
  14. Jarque, Carlos M. & Bera, Anil K., 1980. "Efficient tests for normality, homoscedasticity and serial independence of regression residuals," Economics Letters, Elsevier, vol. 6(3), pages 255-259.
  15. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164, September.
  16. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  17. Eicher, Theo S., 1999. "Trade, development and converging growth rates: Dynamic gains from trade reconsidered," Journal of International Economics, Elsevier, vol. 48(1), pages 179-198, June.
  18. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  19. 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.
  20. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
  21. Purcell, John, 1991. "The Rediscovery of the Management Prerogative: The Management of Labour Relations in the 1980s," Oxford Review of Economic Policy, Oxford University Press, vol. 7(1), pages 33-43, Spring.
  22. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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Cited by:
  1. Gavin Cameron, 2000. "R and D and Growth at the Industry Level," Economics Series Working Papers 2000-W04, University of Oxford, Department of Economics.
  2. Bronwyn H. Hall & Jacques Mairesse & Pierre Mohnen, 2009. "Measuring the Returns to R&D," NBER Working Papers 15622, National Bureau of Economic Research, Inc.
  3. Guido Ascari & Valeria di Cosmo, 2005. "Determinants of total factor productivity in the italian Regions," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2005(2).

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