Does promoting high tech products spur development?

The models of Lucas (1993), Krugman (1987), Stokey (1988, 1991) and Young (1991) predict that productivity growth is associated with the production of increasingly sophisticated products, and that high-end goods should exhibit more productivity growth than low-end goods. This paper investigates the empirical evidence in support of this view, using plant-level panel data from Colombia (1977-1991) and Morocco (1986 -1990). Technician-intensity is used as a measure of product sophistication. The analysis demonstrates that both countries became significantly more technician-intensive over time. This is attributed to increases in technician-intensity within plants, rather than increases in market share of technician-intensive producers. The data do not indicate that productivity growth rates were above average in the high-end plants. However, they do indicate that, in Colombia, the industries undergoing rapid intra-firm growth in technician-intensity were also experiencing relatively rapid productivity improvements. Given that the individual plants in these industries were not experiencing unusually rapid growth, it is argued that they may have been generating positive spillovers for their competitors by increasing the general knowledge stock.