Catch-Up Growth and Inter-industry Productivity Spillovers: Evidence from Trade Data

Marijn A Bolhuis

The World Bank Economic Review, 2024, vol. 38, issue 2, 274-295

Abstract: Where and when does export-led growth work? This paper estimates the importance of inter-industry productivity spillovers for the export-led growth of developing countries. My empirical strategy is based on a standard quantitative trade model that features sector-level gravity in trade flows. Applying the framework to four decades of trade data, I find clear evidence of spillovers, which are larger for skill-intensive sectors. The estimates imply that patterns of sectoral specialization play a quantitatively important role in accounting for the slow convergence of labor productivity in tradable sectors. Quantitative exercises suggest that export-led growth works for poorer countries with an initial comparative advantage in manufacturing, as these countries can use foreign demand from richer countries to reallocate labor towards sectors with high spillovers.

Keywords: export-led growth; productivity; convergence; spillovers; comparative advantage; exports; growth (search for similar items in EconPapers)
Date: 2024
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