Cross-country catch-up in the manufacturing sector: Impacts of heterogeneity on convergence and technology adoption

We analyze how technology transfer from a leading economy affects followers’ productivity growth in manufacturing sectors and Gross Domestic Product. Allowing for heterogeneous technology levels we explore how this impacts rates of catch-up in labor productivity across manufacturing sectors and GDP for 16 OECD nations. Our results indicate that aggregate studies bias downward the estimated rates of catch-up. These rates of catch-up, as well as efficiency levels, also differ across countries. We find that institutional factors such as bureaucratic efficiency are important determinants of the estimated catch-up rates. Copyright Springer-Verlag 2004