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Cross-country comparisons of industry total factor productivity: theory and evidence

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  • James Harrigan

Abstract

International trade economists typically assume that TFP for each industry is the same in every country. This paper casts doubt on this hypothesis, finding large and persistent TFP differences across countries. The paper considers measurement issues in depth, and a methodology for international TFP comparisons is described. This methodology is applied to a dataset on prices, inputs, and outputs for a group of industrialized countries in the 1980s. The paper finds that the United States was the TFP leader in machinery and equipment during the 1980s, with Japan slightly behind. These results are compared to the previous literature on disaggregated TFP comparisons.

Suggested Citation

  • James Harrigan, 1997. "Cross-country comparisons of industry total factor productivity: theory and evidence," Research Paper 9734, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednrp:9734
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    References listed on IDEAS

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    1. Harrigan, James, 1997. "Technology, Factor Supplies, and International Specialization: Estimating the Neoclassical Model," American Economic Review, American Economic Association, vol. 87(4), pages 475-494, September.
    2. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
    3. Diewert, W. Erwin, 1978. "Hick's Aggregation Theorem and the Existence of a Real Value Added Function," Histoy of Economic Thought Chapters,in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 2, chapter 2 McMaster University Archive for the History of Economic Thought.
    4. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455.
    5. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    6. Harrigan, James, 1999. "Estimation of cross-country differences in industry production functions," Journal of International Economics, Elsevier, vol. 47(2), pages 267-293, April.
    7. Hooper, Peter & Larin, Kathryn A, 1989. "International Comparisons of Labor Costs in Manufacturing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 35(4), pages 335-355, December.
    8. Keith E. Maskus, 1991. "Comparing International Trade Data and Product and National Characteristics Data for the Analysis of Trade Models," NBER Chapters,in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 17-60 National Bureau of Economic Research, Inc.
    9. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
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    Citations

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    Cited by:

    1. James Harrigan, 1997. "Estimation of Cross-Country Differences in Industry," NBER Working Papers 6121, National Bureau of Economic Research, Inc.
    2. Harrigan, James, 1997. "Technology, Factor Supplies, and International Specialization: Estimating the Neoclassical Model," American Economic Review, American Economic Association, vol. 87(4), pages 475-494, September.
    3. Giorgio Barba Navaretti & Marzio Galeotti & Alessandra Tucci, 2002. "Do Not Get Trapped into Crossing: Indian Firms and Foreign Markets," Development Working Papers 170, Centro Studi Luca d'Agliano, University of Milano.
    4. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," World Bank Economic Review, World Bank Group, vol. 32(1), pages 163-182.
    5. Marta Simões & Adelaide Duarte, 2007. "Education and growth: an industry-level analysis of the Portuguese manufacturing," GEMF Working Papers 2007-03, GEMF, Faculty of Economics, University of Coimbra.
    6. Herrendorf, Berthold & Teixeira, Arilton, 2002. "How Trade Policy Affects Technology Adoption and Productivity," CEPR Discussion Papers 3486, C.E.P.R. Discussion Papers.
    7. Harrigan, James, 1999. "Estimation of cross-country differences in industry production functions," Journal of International Economics, Elsevier, vol. 47(2), pages 267-293, April.
    8. Berthold Herrendorf & Arilton Teixeira, 2005. "How Barriers to International Trade Affect TFP," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 866-876, October.
    9. Morrow, Peter M., 2010. "Ricardian-Heckscher-Ohlin comparative advantage: Theory and evidence," Journal of International Economics, Elsevier, vol. 82(2), pages 137-151, November.
    10. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    11. Scarpetta, Stefano & Tressel, Thierry, 2004. "Boosting productivity via innovation and adoption of new technologies : any role for labor market institutions?," Policy Research Working Paper Series 3273, The World Bank.
    12. James Harrigan, 2001. "Specialization and the volume of trade: do the data obey the laws?," Staff Reports 140, Federal Reserve Bank of New York.
    13. Gregorio Gimenez & Jaime Sanau, 2007. "Interrelationship among institutional infrastructure, technological innovation and growth. An empirical evidence," Applied Economics, Taylor & Francis Journals, vol. 39(10), pages 1267-1282.
    14. Esposti, Roberto, 2008. "Why Should Regional Agricultural Productivity Growth Converge? Evidence from Italian Regions," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43955, European Association of Agricultural Economists.

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    Keywords

    Industrial productivity;

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