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Manufacturing Productivity: Effects of Service Sector Innovations and Institutions

Author

Listed:
  • Neil Foster-McGregor

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Johannes Pöschl
  • Robert Stehrer

    () (The Vienna Institute for International Economic Studies, wiiw)

Abstract

A major international transmission channel of productivity increases is trade in intermediate products and services. This paper analyses international rent spillovers at the industry level and for the first time investigates effects from the service sector in this international framework. The World Input-Output Database (WIOD) allows us to improve over the traditional approach of using trade in intermediates in the estimation of international spillovers by making use of input-output linkages between industries in different countries. Our results using this novel approach confirm the productivity effects from international manufacturing spillovers found in recent literature. As regards services, which provide a substantial component of the manufacturing sectors’ inputs, our results indicate significant positive productivity effects from innovations in this sector. Furthermore, we control for the effect of domestic institutions on productivity. A high quality of contract enforcement and property rights protection is found to foster firm development and increase productivity in the country. Last but not least educational institutions in the reporter country are an important determinant of productivity developments.

Suggested Citation

  • Neil Foster-McGregor & Johannes Pöschl & Robert Stehrer, 2012. "Manufacturing Productivity: Effects of Service Sector Innovations and Institutions," wiiw Working Papers 89, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:wpaper:89
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    File URL: https://wiiw.ac.at/manufacturing-productivity-effects-of-service-sector-innovations-and-institutions-dlp-2759.pdf
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    References listed on IDEAS

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    1. Falvey, Rod & Foster, Neil & Greenaway, David, 2007. "Relative backwardness, absorptive capacity and knowledge spillovers," Economics Letters, Elsevier, vol. 97(3), pages 230-234, December.
    2. Lichtenberg, Frank R. & Pottelsberghe de la Potterie, Bruno v., 1998. "International R&D spillovers: A comment," European Economic Review, Elsevier, vol. 42(8), pages 1483-1491, September.
    3. Damiaan Persyn & Joakim Westerlund, 2008. "Error-correction–based cointegration tests for panel data," Stata Journal, StataCorp LP, vol. 8(2), pages 232-241, June.
    4. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    5. Keller, Wolfgang, 2002. "Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March.
    6. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    7. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    8. Sunil Kanwar & Robert Evenson, 2003. "Does intellectual property protection spur technological change?," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 235-264, April.
    9. Bernstein, Jeffrey I & Nadiri, M Ishaq, 1988. "Interindustry R&D Spillovers, Rates of Return, and Production in High-Tech Industries," American Economic Review, American Economic Association, vol. 78(2), pages 429-434, May.
    10. Michele Cincera & Bruno Van Pottelsberghe, 2001. "International R&D spillovers: a survey," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 169(169), pages 3-31.
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    Citations

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    Cited by:

    1. Neil Foster-McGregor & Johannes Pöschl, 2016. "Productivity effects of knowledge transfers through labour mobility," Journal of Productivity Analysis, Springer, vol. 46(2), pages 169-184, December.
    2. repec:kap:jtecht:v:42:y:2017:i:6:d:10.1007_s10961-016-9528-x is not listed on IDEAS

    More about this item

    Keywords

    productivity; research and development; services; spillovers; institutions;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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