Productivity Growth and Product Variety : Gains from Imitation and Education

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Addison, Douglas M.
dc.date.accessioned
2014-05-12T18:02:06Z
dc.date.available
2014-05-12T18:02:06Z
dc.date.issued
2003-04
dc.date.lastModified
2021-04-23T14:03:42Z
dc.description.abstract
Is there a correlation between productivity and product variety? Certainly it appears that the rich countries are more productive and have more product variety than the poor nations. In fact, the relationship is quite strong when measured in levels. Does this same correlation hold up when measured in growth rates? If so, can poor countries imitate the success of the rich? Addison provides theoretical and empirical reasons to believe the answer to both questions is yes. Recent economic theory suggests that rising variety in factor inputs can help avoid diminishing marginal returns. Product variety can also sustain learning-by-doing which would otherwise be exhausted in a fixed number of products. Finally, invention or imitation adds to the stock of non-rival knowledge. There have been only two previous empirical tests of the correlation between growth in product variety and productivity growth. Both were affirmative but neither examined a wide range of developing countries and neither looked deeper to test what might drive product variety. This research is based on a cross-country sample of 29 countries (13 rich and 16 poor). The data display a statistically significant and positive relationship between growth in product variety and productivity growth when condition on other variables such as research and development (R&D) employment, macroeconomic stability, and domestic security. These results are robust to the addition and subtraction of various explanatory variables but fragile with respect to an influential data point for Venezuela. Industrial nations tend to generate most of their productivity gains through R&D employment in a stable environment that results in better production processes and product quality. In contrast, the largest source of productivity growth in developing countries is product variety imitation while instability takes away from productivity. Addison tests various explanations for growth in variety. The results show that nations furthest from the frontier of observable variety tend to imitate fastest, with the ability to imitate being improved by educational attainment and by productivity gains. This could be a source of hope for small, less developed nations. Growth in market size was not correlated with growth in variety, though this may be due to a rather short sample period of only eight years. In addition to the empirical testing, Addison also contributes to a general discussion of measurement concepts and measurement issues related to product variety and sets out an agenda for further research.
en
dc.identifier
http://documents.worldbank.org/curated/en/2003/04/2300153/productivity-growth-product-variety-gains-imitation-education
dc.identifier.uri
http://hdl.handle.net/10986/18252
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper;No. 3023
dc.rights
CC BY 3.0 IGO
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
AVERAGE GROWTH
dc.subject
AVERAGE GROWTH RATE
dc.subject
AVERAGE RATE
dc.subject
CAPITAL GOODS
dc.subject
CAPITAL GROWTH
dc.subject
CAPITAL STOCK
dc.subject
CAPITAL STOCK GROWTH
dc.subject
CONSUMER PREFERENCES
dc.subject
CONSUMER PRICE INFLATION
dc.subject
CONSUMERS
dc.subject
COUNTRY CHARACTERISTICS
dc.subject
COUNTRY OBSERVATIONS
dc.subject
COUNTRY SIZE
dc.subject
COURNOT COMPETITION
dc.subject
CPI
dc.subject
DEMAND SIDE
dc.subject
DESCRIPTIVE STATISTICS
dc.subject
DEVELOPED COUNTRIES
dc.subject
DEVELOPING COUNTRIES
dc.subject
DEVELOPMENT POLICY
dc.subject
ECONOMIC DEVELOPMENT
dc.subject
ECONOMIC THEORY
dc.subject
ECONOMISTS
dc.subject
EDUCATIONAL ATTAINMENT
dc.subject
ELASTICITY
dc.subject
EMPIRICAL LITERATURE
dc.subject
EMPIRICAL RESEARCH
dc.subject
EMPIRICAL WORK
dc.subject
EMPLOYMENT
dc.subject
ENDOGENOUS GROWTH
dc.subject
ENDOGENOUS REGRESSORS
dc.subject
ENDOGENOUS VARIABLES
dc.subject
EQUATIONS
dc.subject
ERROR TERM
dc.subject
EXOGENOUS VARIABLES
dc.subject
EXPLANATORY POWER
dc.subject
EXPLANATORY VARIABLES
dc.subject
EXPORTS
dc.subject
FACTOR ACCUMULATION
dc.subject
FIXED COSTS
dc.subject
FIXED EFFECTS
dc.subject
FOREIGN INVESTMENT
dc.subject
FUNCTIONAL FORM
dc.subject
FUTURE RESEARCH
dc.subject
GDP
dc.subject
GDP PER CAPITA
dc.subject
GOVERNMENT EXPENDITURES
dc.subject
GROWTH RATE
dc.subject
GROWTH RATES
dc.subject
HETEROSKEDASTICITY
dc.subject
HUMAN CAPITAL
dc.subject
IMPERFECT COMPETITION
dc.subject
IMPORTS
dc.subject
INCOME
dc.subject
INCREASING RETURNS
dc.subject
INCREASING RETURNS TO SCALE
dc.subject
INDEPENDENT VARIABLES
dc.subject
INDIVIDUAL COUNTRIES
dc.subject
INFLATION
dc.subject
INFLATION RATE
dc.subject
INTERMEDIATE GOODS
dc.subject
INTERNATIONAL TRADE
dc.subject
LABOR FORCE
dc.subject
LABOR FORCE GROWTH
dc.subject
LIFE EXPECTANCY
dc.subject
MACRO STABILITY
dc.subject
MACROECONOMIC INSTABILITY
dc.subject
MACROECONOMIC MANAGEMENT
dc.subject
MARGINAL RETURNS
dc.subject
MEASUREMENT ERROR
dc.subject
MODEL SPECIFICATIONS
dc.subject
NEGATIVE GROWTH
dc.subject
0 HYPOTHESIS
dc.subject
OBSERVED CHANGES
dc.subject
OIL
dc.subject
OPEC
dc.subject
OUTPUT GROWTH
dc.subject
POLICY IMPLICATIONS
dc.subject
POLICY RESEARCH
dc.subject
POPULATION GROWTH
dc.subject
POSITIVE CORRELATION
dc.subject
POSITIVE RELATIONSHIP
dc.subject
POVERTY REDUCTION
dc.subject
PRODUCERS
dc.subject
PRODUCT DIFFERENTIATION
dc.subject
PRODUCTION FUNCTION
dc.subject
PRODUCTION PROCESSES
dc.subject
PRODUCTIVITY
dc.subject
PRODUCTIVITY GROWTH
dc.subject
PUBLIC INVESTMENT
dc.subject
REAL EXCHANGE RATE
dc.subject
REAL GROWTH
dc.subject
RICH COUNTRIES
dc.subject
SIGNIFICANT CORRELATION
dc.subject
STANDARD DEVIATION
dc.subject
TELECOMMUNICATIONS
dc.subject
TFP
dc.subject
TOTAL FACTOR PRODUCTIVITY
dc.subject
TRADE POLICIES
dc.subject
URBAN AREAS PRODUCTIVITY
dc.subject
GROWTH RATE
dc.subject
ECONOMIC THEORY
dc.subject
DEVELOPING COUNTRIES
dc.subject
MACROECONOMIC STABILITY
dc.subject
EMPLOYMENT
dc.subject
THEORY
dc.subject
HYPOTHESIS TESTING
dc.subject
STATISTICAL DATA
dc.subject
URBAN AREAS
dc.title
Productivity Growth and Product Variety : Gains from Imitation and Education
en
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.doctype
Publications & Research
okr.docurl
http://documents.worldbank.org/curated/en/2003/04/2300153/productivity-growth-product-variety-gains-imitation-education
okr.globalpractice
Macroeconomics and Fiscal Management
okr.globalpractice
Poverty
okr.globalpractice
Health, Nutrition, and Population
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-3023
okr.identifier.externaldocumentum
000094946_03050804060524
okr.identifier.internaldocumentum
2300153
okr.identifier.report
WPS3023
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2003/05/23/000094946_03050804060524/Rendered/PDF/multi0page.pdf
en
okr.region.administrative
Africa
okr.topic
Poverty Reduction :: Achieving Shared Growth
okr.topic
Economic Theory and Research
okr.topic
Health Monitoring and Evaluation
okr.topic
Macroeconomics and Economic Growth :: Economic Conditions and Volatility
okr.topic
Environmental Economics and Policies
okr.topic
Health, Nutrition and Population :: Public Health Promotion
okr.topic
Poverty Reduction :: Inequality
okr.topic
Macroeconomics and Economic Growth :: Economic Growth
okr.unit
Poverty Reduction and Economic Management 3, Africa Technical Families
okr.volume
1

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