Convergence of Productivity: Cross-National Studies and Historical Evidence
William J. Baumol, Richard R. Nelson, Edward N. Wolff
Oxford University Press, 1994 M06 30 - 343 pages
This comprehensive study is a collection of original articles that view the current state of knowledge of the convergence hypothesis. The hypothesis asserts that at least since the Second World War, and perhaps for a considerable period before that, the group of industrial countries was growing increasingly homogeneous in terms of levels of productivity, technology and per capita incomes. In addition, there was general catch up toward the leader, with gradual erosion of the gap between the leader country, the U.S., throughout most of the pertinent period, and that of the countries lagging most closely behind it. The book examines patterns displayed by individual industries within countries as well as the aggregate economies, various influences that underlie the process of convergence that seems to have occurred, and the role that convergence has played and promises to play in the future of the newly industrialized nations and the less developed countries. Much of the analysis is set in a historical perspective, with particular attention paid to the record following World War II. The prestigious editors conclude that increasing productivity is the key to rising living standards in a globalized marketplace. Contributors include: Moses Abramovitz, Alice M. Amsden, Magnus Blomstrom, David Dollar, Takashi Hikino, Gregory Ingram, William Lazonick, Frank Lichtenberg, Robert E. Lipsey, Angus Maddison, Gavin Wright, and Mario Zejan.
What Lies Behind Convergence?
The NICs and the LDCs
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Abramovitz aggregate American ancillary variables average Baumol British Cambridge capital accumulation capital intensity capital stock capital—labor ratios capitalist catch-up changes coefficient of variation competitive convergence process coun developing countries Economic Growth effect employment engineers enrollment rates enterprises equipment estimates Europe European exports firms foreign GDP per capita Germany growth accounts growth rates Il.a important increased indicators innovation investment Japan Japanese labor force labor productivity late-industrializing Lazonick leader leadership Maddison managerial manufacturing measure ment Mexican Mexico MNCs multinationals Netherlands nomic OECD organization output per-capita GDP per-capita income percent period population postwar potential productivity convergence productivity growth productivity levels relative sample second Industrial Revolution sector share significant social Source statistics Table Taiwan technical TFP levels total factor productivity trade twentieth century United Kingdom University Press vergence wage wage share Wolff workers World World War II
Page 306 - I started a cosmetic cream factory in the 1940s. At the time, no company could supply us with plastic caps of adequate quality for cream jars, so we had to start a plastic business. Plastic caps alone were not sufficient to run the plastic-molding plant, so we added combs, toothbrushes, and soap boxes. This plastics business also led us to manufacture electrical and electronic products and telecommunication equipment.
Page 306 - The plastics business also led us to manufacture electrical and electronic products and telecommunication equipment. The plastics business also took us into oil refining which needed a tanker-shipping company. The oil-refining company alone was paying an insurance premium amounting to more than half the total revenue of the then largest insurance company in Korea. Thus, an insurance company was started. This natural step-by-step evolution through related businesses...
Page 145 - ... world industrial preeminence. The United States was a well-educated country, but most of the workers in the fast-paced, heavyindustry, mass-production manufacturing in which the country led the world were not well-educated native-born Americans. In 1910 the foreign born and sons of foreign born were more than 60 percent of the machine operatives in the country, and more than two-thirds of the laborers in mining and manufacturing (US Senate, 1911, pp. 332, 334). There is no reason to believe that...
Page 217 - I had undertaken under the sponsorship of the Division of Information Science and Technology of the National Science Foundation...
Page 69 - Equipment investment has far more explanatory power for national rates of productivity growth than other components of investment, and outperforms many other variables included in cross-country equations accounting for growth. High rates of equipment investment can, for example, account for nearly all of Japan's extraordinary growth performance.
Page 35 - ... problem rather than to the solution. As Maddison put it (cited in Amsden, 1994): (What) reinforced the sharpness of the slowdown (after 1973) was the basic change in the 'establishment view' of economic policy objectives. The new consensus emerged as a response to events, but it also helped to mould them. The shock of inflation, the new wave of payments problems, and speculative possibilities brought a profound switch away from Keynesian type attitudes toward demand management and full employment....
Page 60 - Productivity Leadership in Manufacturing: Germany, Japan, and the United States 1973-1989' Research Memorandum No. 456, Institute of Economic Research, University of Groningen.