The Manufacturing Sector Did Contribute to Convergence Among the OECD Countries

Wei-Kang Wong ()

Departmental Working Papers from National University of Singapore, Department of Economics

Abstract: This paper revisits the role of sectors in aggregate convergence. The existing evidence is inconclusive because its methodology depends sensitively on the conversion factor used to compare sectoral productivity levels across countries. This paper proposes a robust methodology -- ß-decomposition - to directly estimate how much the productivity growth in each sector and between -sector restructuring contribute to convergence. This methodology avoids the sectoral PPP-conversion-factor problem because it compares only sectoral growth rates and shares -- not levels -- across countries. The evidence suggests that productivity growth in both manufacturing and services were important in driving aggregate productivity convergence among the OECD countries. The results are robust to the choice of base year.

Keywords: Convergence; ß-Decomposition; Shift-Share Decomposition; Sectoral Decomposition (search for similar items in EconPapers)
JEL-codes: O41 O47 (search for similar items in EconPapers)
Date: 2002-10
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Persistent link: http://EconPapers.repec.org/RePEc:nus:nusewp:wp0215

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