Long-Run Convergence In Manufacturing And Innovation-Based Models

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Following the papers of Broadberry (1993), Wolf (1994), Bernard and Jones (1996a, 1996b) and Carree et al. (2000), it is widely believed that labor productivity in manufacturing has not been converging across the OECD countries. Bernard and Jones (1996a) conclude that the service sector has been the driving force behind the finding of economy-wide convergence in the literature. However, since trade in services has been low compared to trade in intermediate manufacturing goods, we would expect any international transmission of technology to be stronger in manufacturing than in services, to the extent that convergence is driven by trade. Therefore, we should expect convergence in manufacturing to have been more pronounced than convergence in services.