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Openness and its association with productivity growth in UK manufacturing industry

Author

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  • Gavin Cameron
  • James Proudman
  • Stephen Redding

Abstract

A large theoretical literature exists that suggests that differences in growth performance may be related to variations in the extent of international openness. This paper is concerned with quantifying measures of openness and examining their association with productivity growth across 19 sectors in UK manufacturing between 1970 and 1992. Using the statistical technique of discriminant analysis, sectors were sorted into groups on the basis of their measured values of openness in 1970. Sectors classified as relatively open enjoyed significantly higher rates of total factor productivity (TFP) growth between 1970 and 1992 than those classified as closed. There was a positive correlation between the growth in labour productivity and lagged values of each of the observed measures of openness. This relationship was explained by a strong relationship between lagged values of openness and TFP growth. But, there was no evidence of a positive relationship between openness and that part of labour productivity growth explained by capital accumulation.

Suggested Citation

  • Gavin Cameron & James Proudman & Stephen Redding, 1999. "Openness and its association with productivity growth in UK manufacturing industry," Bank of England working papers 104, Bank of England.
  • Handle: RePEc:boe:boeewp:104
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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/1999/wp104.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, July.
    2. Kaplan, Muhittin & Aslan, Alper, 2006. "Türki̇ye’Ni̇n Dişa Açilma Oraninin Ölçümü, 1965-1995," MPRA Paper 10603, University Library of Munich, Germany.
    3. Rachel Griffith & Helen Simpson, 2004. "Characteristics of Foreign-Owned Firms in British Manufacturing," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 147-180 National Bureau of Economic Research, Inc.
    4. Stephen Redding & James Proudman, 1998. "Productivity convergence and international openness," Bank of England working papers 77, Bank of England.
    5. Liu, Xiaohui & Wang, Chenggang, 2003. "Does foreign direct investment facilitate technological progress?: Evidence from Chinese industries," Research Policy, Elsevier, vol. 32(6), pages 945-953, June.
    6. Charles St-Arnaud, 2004. "Une approche éclectique d'estimation du PIB potentiel pour le Royaume-Uni," Staff Working Papers 04-46, Bank of Canada.
    7. Deb Kusum Das, 2007. "Trade Liberalization and Industrial Productivity: An Assessment of Developing Country Experiences," Working Papers id:1009, eSocialSciences.
    8. Miguélez, Ernest & Moreno, Rosina, 2015. "Knowledge flows and the absorptive capacity of regions," Research Policy, Elsevier, vol. 44(4), pages 833-848.

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