Comparing TFP Catching-up and Capital Deepening in US and European Growths: A Directional Distance Function Approach
In Solow’s model the income convergence between countries arises from two main sources: a capital deepening effect resulting from the diminishing returns of the production technology and a technological transfer/diffusion effect related to Total Factor Productivity (TFP) differences. A large literature has been devoted to analyze these effects but most of the studies suffer from three weaknesses by defining the US as the a priori technological leader, by using a parametric functional form and by assuming constant returns to scale for the technology. Our paper offers an alternative approach based on a non-parametric programming framework and the estimation of directional distance functions. We explicitly separate country TFP differences into two components: a technology effect and a scale effect to study the catching-up process on each of them. We also analyze the role of the capital deepening effect by introducing a relevant measure of the structural efficiency which reveals inefficiencies due to changes in input-ratio differences. Our empirical work focuses on 15 European countries (EU) and the US over the period 1980-2004. We use time series procedures to test for convergence for individual countries or sub-sets of countries.
|Date of creation:||Jan 2008|
|Contact details of provider:|| Postal: 3, rue de la Digue, FR-59000 Lille|
Web page: http://www.ieseg.fr/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Young, Alwyn, 1994. "Lessons from the East Asian NICS: A contrarian view," European Economic Review, Elsevier, vol. 38(3-4), pages 964-973, April.
- repec:sae:niesru:v:162:y::i:1:p:57-74 is not listed on IDEAS
- Timmer, Marcel P. & Ypma, Gerard & Ark, Bart van der, 2003. "IT in the European Union: driving productivity divergence?," GGDC Research Memorandum 200363, Groningen Growth and Development Centre, University of Groningen.
- Bernard, Andrew B & Durlauf, Steven N, 1995.
"Convergence in International Output,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 10(2), pages 97-108, April-Jun.
- Bernard, A.B. & Durlauf, S.N., 1993. "Convergence in International Output," Working papers 93-7, Massachusetts Institute of Technology (MIT), Department of Economics.
- Wolff, Edward N, 1991. "Capital Formation and Productivity Convergence over the Long Term," American Economic Review, American Economic Association, vol. 81(3), pages 565-579, June.
- Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
- Taskin, Fatma & Zaim, Osman, 1997. "Catching-up and innovation in high- and low-income countries," Economics Letters, Elsevier, vol. 54(1), pages 93-100, January.
- Walter Briec & Benoit Dervaux & Hervé Leleu, 2003. "Aggregation of Directional Distance Functions and Industrial Efficiency," Journal of Economics, Springer, vol. 79(3), pages 237-261, July.
- Benoit Dervaux & Gary Ferrier & Herve Leleu & Vivian Valdmanis, 2004. "Comparing French and US hospital technologies: a directional input distance function approach," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1065-1081.
- Alwyn Young, 1992. "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore," NBER Chapters,in: NBER Macroeconomics Annual 1992, Volume 7, pages 13-64 National Bureau of Economic Research, Inc.
- Subodh Kumar & R. Robert Russell, 2002. "Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence," American Economic Review, American Economic Association, vol. 92(3), pages 527-548, June.
- Christopoulos, Dimitris K., 2007. "Explaining country's efficiency performance," Economic Modelling, Elsevier, vol. 24(2), pages 224-235, March.
- Evans, Paul & Karras, Georgios, 1996. "Convergence revisited," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 249-265, April.
- Nazrul Islam, 2001. "Different Approaches to International Comparison of Total Factor Productivity," NBER Chapters,in: New Developments in Productivity Analysis, pages 465-508 National Bureau of Economic Research, Inc.
- S. Nahar & B. Inder, 2002. "Testing convergence in economic growth for OECD countries," Applied Economics, Taylor & Francis Journals, vol. 34(16), pages 2011-2022.
- Nahar, S. & Inder, B., 1998. "Testing Convergence in Economic Growth for OECD Countries," Monash Econometrics and Business Statistics Working Papers 14/98, Monash University, Department of Econometrics and Business Statistics.
- Nazrul Islam, 2003. "What have We Learnt from the Convergence Debate?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 309-362, July.
- Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
- Dowrick, Steve & Nguyen, Duc-Tho, 1989. "OECD Comparative Economic Growth 1950-85: Catch-Up and Convergence," American Economic Review, American Economic Association, vol. 79(5), pages 1010-1030, December.
- Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
- Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ies:wpaper:e200801. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monika Marin)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.