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Productivity Analysis in Global Manufacturing Production

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  • Francis Teal
  • Markus Eberhardt

Abstract

Despite the widely recognised importance of the manufacturing industry for successful development few studies investigate this sector in cross-country analysis. We fill this gap in the literature by analysing manufacturing production across a large number of developing and developed economies. Our empirical framework allows for heterogeneous production technology and accounts for endogeneity as well as cross-section dependence in the panel. Our results imply that differences in production technology are of crucial importance for understanding cross-country differences in labour productivity and their underlying causes. In the light of these findings the interpretation of regression intercepts as TFP level estimates collapses and we introduce an alternative measure which is robust to parameter heterogeneity.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 515.

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Date of creation: 01 Nov 2010
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Handle: RePEc:oxf:wpaper:515

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Keywords: Cross-country analysis; parameter heterogeneity; productivity levels; panel time series econometrics; common factor model;

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