Date Added: Nov 2010
Despite the widely recognised importance of the manufacturing industry for successful development few studies investigate this sector in cross-country analysis. The authors fill this gap in the literature by analysing manufacturing production across a large number of developing and developed economies. The empirical framework allows for heterogeneous production technology and accounts for endogeneity as well as cross-section dependence in the panel. The results imply that differences in production technology are of crucial importance for understanding cross-country differences in labour productivity and their underlying causes.