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Detecting Technological Catch-Up In Economic Convergence

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  • Pigliaru, Francesco

Abstract

We address the problem of measuring, in the absence of reliable indices of technology levels, how much of the convergence we observe is due to convergence in technology or in capital-labour ratios. We first develop a growth model where technology accumulation in lagging economies depends on their propensity to innovate and on technological spillovers, with convergence due both to capital-deepening and to technological diffusion. Then we study the transitional dynamics of the model to show how to discriminate empirically between the following three hypotheses: (i) convergence is due to capital-deepening with technology levels uniform across economies, as in Mankiw, Romer and Weil; (ii) convergence is due to capital-deepening with stationary differences in individual technologies, as in Islam; (iii) convergence is due to both technological catch-up and capital-deepening. Our main findings are as follows. First, we show that it may be difficult to distinguish between hypotheses (ii) and (iii) in cross-section or panel data. This problem has often been overlooked in the empirical literature on convergence. Second, we suggest how the problem can be overcome by noting that hypothesis (iii) does (and hypothesis (ii) does not) imply that the initial differences in technology levels may tend to decrease over time. A careful analysis of the fixed-effects estimates obtained by means of panel data methodology proposed in Islam should allow researchers to discriminate between the two competing hypotheses. Copyright Blackwell Publishing Ltd 2003.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa00p21.

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Date of creation: Aug 2000
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Handle: RePEc:wiw:wiwrsa:ersa00p21

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  1. Robert J. Barro & Xavier Sala-i-Martin, 1995. "Technological diffusion, convergence and growth," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 116, Department of Economics and Business, Universitat Pompeu Fabra.
  2. S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers, Centre for Economic Performance, LSE dp0384, Centre for Economic Performance, LSE.
  3. Nazrul Islam, 1998. "Growth Empirics: A Panel Data Approach- A Reply," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(1), pages 325-329, February.
  4. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 83-116, February.
  5. 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, Elsevier, vol. 34(2), pages 143-173, October.
  6. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(4), pages 1127-70, November.
  7. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 407-37, May.
  8. Charles I. Jones, . "Convergence Revisited," Working Papers, Stanford University, Department of Economics 96006, Stanford University, Department of Economics.
  9. Jan Fagerberg & Bart Verspagen & Marjolein Cani�ls, 1997. "Technology, Growth and Unemployment across European Regions," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(5), pages 457-466.
  10. Bernard, Andrew B & Jones, Charles I, 1996. "Technology and Convergence," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(437), pages 1037-44, July.
  11. Kevin Lee & M. Hashem Pesaran & Ron Smith, 1998. "Growth Empirics: A Panel Data Approach- A Comment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(1), pages 319-323, February.
  12. Maurizio Pugno, 1993. "On Competing Theories of Economic Growth: a Cross-country Evidence," Department of Economics Working Papers, Department of Economics, University of Trento, Italia 9309, Department of Economics, University of Trento, Italia.
  13. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 189, Cowles Foundation for Research in Economics, Yale University.
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Cited by:
  1. R. Carcangiu & G. Sistu & S. Usai, 1999. "Struttura socio-economica dei comuni della Sardegna. Suggerimenti da un’analisi cluster," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 199903, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  2. Alexiadis, Stilianos & Tomkins, Judith, 2010. "Technology adoption and club convergence," MPRA Paper 21137, University Library of Munich, Germany.
  3. Adriana Di Liberto & Francesco Pigliaru & Roberto Mura, 2008. "How to measure the unobservable: a panel technique for the analysis of TFP convergence," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 343-368, April.
  4. Palan, Nicole & Schmiedeberg, Claudia, 2010. "Structural convergence of European countries," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 21(2), pages 85-100, May.
  5. C. Antonelli & R. Marchionatti & S. Usai, 2000. "Productivity and External Knowledge: The Italian Case," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 200009, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  6. R. Paci & F. Pigliaru, 2001. "Technological Diffusion, Spatial Spillovers And Regional Convergence In Europe," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 200101, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  7. Jochen Hartwig, 2010. "Testing the growth effects of structural change," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 10-264, KOF Swiss Economic Institute, ETH Zurich.
  8. M. Musumeci, 2000. "Innovazione tecnologica e beni culturali. Uno studio sulla situazione della Sicilia," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 200008, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  9. Alexiadis Stilianos & Christos Ap. LADIAS, 2011. "Optimal Allocation Of Investment And Regional Disparities," Regional Science Inquiry, Hellenic Association of Regional Scientists, Hellenic Association of Regional Scientists, vol. 0(2), pages 45-59, December.
  10. LR. Keller & E. Strazzera, 2000. "Examining predictive models among discounting models," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 200005, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  11. Silvia Dal Bianco, 2010. "Technology Diffusion or Capital Accumulation? An Empirical Assessment of Convergence in Manufacturing," Quaderni di Dipartimento, University of Pavia, Department of Economics and Quantitative Methods 114, University of Pavia, Department of Economics and Quantitative Methods.
  12. repec:hrs:journl:v:3:y:2011:i:2:p:45-59 is not listed on IDEAS
  13. R. Naylor, 2001. "Firm profits and the number of firms under unionised oligopoly," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 200109, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  14. Höhenberger, Nicole & Schmiedeberg, Claudia, 2008. "Structural convergence of European countries," Center for European, Governance and Economic Development Research Discussion Papers, University of Goettingen, Department of Economics 75, University of Goettingen, Department of Economics.
  15. R. Naylor, 2001. "Industry profits and market size under bilateral oligopoly," Working Paper CRENoS, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia 200108, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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