Geography, Structural Change and Economic Development

Geography, Structural Change and Economic Development

Theory and Empirics

Edited by Neri Salvadori, Pasquale Commendatore and Massimo Tamberi

The authors in this book regard the process of economic expansion as a non-homogeneous and multifaceted phenomenon which has deeply affected human welfare, and cultural, social and political change. The book is a bridge between the theorists (Rosenstein-Rodan, Lewis, Myrdal, and Hirschmann) who in the post-war period analyzed regional inequalities, structural change and dualism, and the modern literature on economic growth. The latter has emphasized the existence of multiple equilibria, bifurcations and various types of dynamic complexity, and clarified the conditions for the emergence of phenomena such as cumulative causation, path dependence and hysteresis. These are the typical ingredients of structural change, economic development or underdevelopment.

Chapter 11: Labour Productivity and Technological Capability: An Econometric Analysis on the Italian Regions

Giulio Guarini

Subjects: economics and finance, radical and feminist economics

Extract

Giulio Guarini 11.1. INTRODUCTION It is widely argued in the economics literature that high technological capability is essential for economic development because it generates innovations by accelerating technological progress. Moreover, in the global economy technical knowledge is a means to compete in the global market. Using econometric analysis this chapter aims to verify the effect of technological capability on labour productivity in the Italian regions. For this purpose, I construct a new version of the labour productivity function of Sylos Labini, where the growth rate of productivity depends on three effects: the Smith effect, represented by the growth rate of market size that is stimulated by labour division and learning by doing; the Ricardo effect, represented by investment in new machinery stimulated by the growth rate of the relative labour cost (defined as the difference between wages and price of machinery); and the knowledge effect, introduced in this chapter, represented by variables linked to technological capability. I estimate regressions for manufacturing and consider several other variables linked to knowledge, both individually and all together. Moreover, through a dummy analysis I investigate whether the dynamics of knowledge is significantly conditioned by territorial factors. The chapter is structured as follows. First, I present a state-of-the-art review of the literature on this topic. Subsequently, I explain the econometric model estimated with the main information of econometric analysis. Finally, I illustrate the results of the econometric analysis. Empirical evidence suggests that in the Italian regions, especially in the centre-northern regions, improvements in technological capability...

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