Growth and Crisis
Edited by Matilde Mas and Robert Stehrer
Chapter 11: Productivity Convergence Across Industries and Countries: The Importance of Theory-based Measurement
Robert Inklaar and Marcel P. Timmer 11.1 INTRODUCTION Comparative productivity levels are an important ingredient in crosscountry studies of economic growth. Initially, this research was mainly focused on explaining patterns of convergence and divergence at the aggregate level.1 More recently, studies on the differences in performance at the sectoral level (agriculture, manufacturing and services) have appeared, motivated by the influential study by Bernard and Jones (1996), henceforth BJ. They found that across a set of selected OECD countries, convergence at the aggregate does not necessarily imply convergence at the industry level. In particular they found that during the period 1970–87 manufacturing showed little evidence of productivity convergence, in contrast to the services sector in which convergence was strong. These findings have not been undisputed. Sørensen (2001) showed that the finding of non-convergence in manufacturing heavily depended on the choice of a set of purchasing power parities (PPPs) to convert national currencies into comparable units. BJ used one set of aggregate GDP PPPs to convert all sectoral variables. However, as sectoral prices do not move in tandem over time, the sectoral findings of BJ became highly sensitive to the choice of the base year for the aggregate PPPs. Typically, manufacturing prices grow much slower than prices of services and a common PPP would not capture this difference. In their reply, BJ conclude that: ‘future research is needed to construct conversion factors appropriate to each sector and that research relying on international comparisons of sectoral productivity and income should proceed...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.