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PRODUCTIVITY CONVERGENCE ACROSS INDUSTRIES AND COUNTRIES: THE IMPORTANCE OF THEORY-BASED MEASUREMENT

Published online by Cambridge University Press:  15 September 2009

Robert Inklaar
Affiliation:
Groningen Growth and Development Centre
Marcel P. Timmer*
Affiliation:
Groningen Growth and Development Centre
*
Address correspondence to: Marcel Timmer, Groningen Growth and Development Centre, Faculty of Economics and Business, University of Groningen, P.O. Box 800, 9700 AV Groningen, The Netherlands; e-mail: m.p.timmer@rug.nl.

Abstract

Cross-country studies of economic growth have been hampered by the scarcity of reliable data on productivity at the industry level; see Bernard and Jones [American Economic Review, 91 (4) (2001), 1168–1169] and Rogerson [Journal of Political Economy, 116 (2) (2008), 235–259]. We bring together literature on industry prices, human capital, and capital assets to construct industry-level productivity measures that are well grounded in neoclassical production theory. These theory-based measures differ widely from the crude measures commonly used in the literature. We use these to confirm and strengthen the finding of Bernard and Jones [American Economic Review, 86 (5) (1996), 1216–1238] that for advanced OECD countries, patterns of convergence across sectors have differed since 1970: whereas productivity in market services converged, there is no convergence in manufacturing. More detailed analysis confirms that patterns of convergence are highly industry-specific. There is no dominant convergence trend in sectoral productivity growth across advanced countries.

Type
Articles
Copyright
Copyright © Cambridge University Press 2009

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PRODUCTIVITY CONVERGENCE ACROSS INDUSTRIES AND COUNTRIES: THE IMPORTANCE OF THEORY-BASED MEASUREMENT
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