Productivity convergence and international openness
There is a strong partial correlation between openness and rates of productivity growth across UK manufacturing sectors. The paper investigates the relationship more formally, within a theoretical model of productivity catch-up. The model identifies three potential effects of international openness: openness may affect (a) domestic rates of innovation, (b) the quantity of technological know-how that may be transferred from the frontier to the less advanced economy, (c) the rate at which this technology transfer occurs. From the theoretical framework, an econometric equation is derived which is used to estimate the relationship between UK productivity growth, the UK-US productivity gap and the degree of international openness. International openness is found, primarily, to affect the rate of productivity convergence, and this relationship is robust to the inclusion of information on R&D intensity, human capital, unionisation and capacity utilisation.
|Date of creation:||Mar 1998|
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- Bernard, Andrew B & Jones, Charles I, 1996.
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- G Cameron, 1996. "Innovation and Economic Growth," CEP Discussion Papers dp0277, Centre for Economic Performance, LSE.
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- Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
- Gavin Cameron & James Proudman & Stephen Redding, 1997. "Deconstructing Growth in UK Manufacturing," Bank of England working papers 73, Bank of England.
- Cameron, G. & Proudman, J. & Redding, S., 1998. "Deconstructing Growth in UK Manufacturing," Papers 28, Centre for Economic Performance & Institute of Economics.
- Dan Ben-David, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 653-679.
- 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. Full references (including those not matched with items on IDEAS)
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