Productivity growth from an international trade perspective

Ulf Lewrick, Lukas Mohler and Rolf Weder

Review of International Economics, 2018, vol. 26, issue 2, 339-356

Abstract: This paper presents a framework to assess the relative importance of three key sources of productivity growth that international trade research focuses on: (1) inter‐industry specialization; (2) intra‐industry reallocation of resources across heterogeneous firms; and (3) technological progress. We illustrate how to apply the framework by deciphering the productivity dynamics of the Swiss manufacturing industry. We find that intra‐industry reallocations are the most important source of growth in aggregate total factor productivity, spurred by the productivity growth of large, incumbent firms and the entry of new firms. Inter‐industry specialization and general technological progress, nevertheless, remain important supplementary sources of productivity growth.

Date: 2018
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