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Technological and non-technological drivers of productivity dynamics in developed and emerging market economies

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  • Dieppe, Alistair
  • Francis, Neville
  • Kindberg-Hanlon, Gene

Abstract

Frequently, factors other than structural developments in technology and production efficiency drive changes in labor productivity in advanced economies (AEs) and emerging market and developing economies (EMDEs). In this paper, we contrast the responses of AEs and EMDEs to innovations in technology and investigate whether the cross-country co-movement in productivity is due to technological or non-technological factors. We find that technological innovations are associated with higher and more rapidly increasing rates of investment in EMDEs relative to AEs, suggesting that positive technological developments are often capital-embodied in the former economies. Employment falls in both AEs and EMDEs following positive technology developments, with the effect smaller but more persistent in EMDEs. Low cross-country correlations of technological developments suggest that global synchronization of labor productivity growth is primarily due to non-technological influences. Overall, non-technological factors accounted for most of the fall in labor productivity growth during 2007-09 but less than one-half of the longer-term productivity decline after the global financial crisis in the median AE and EMDE.

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  • Dieppe, Alistair & Francis, Neville & Kindberg-Hanlon, Gene, 2021. "Technological and non-technological drivers of productivity dynamics in developed and emerging market economies," Journal of Economic Dynamics and Control, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:dyncon:v:131:y:2021:i:c:s0165188921001512
    DOI: 10.1016/j.jedc.2021.104216
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    More about this item

    Keywords

    Productivity; Technology and technological diffusion; Advanced economies and emerging and developing economies;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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