Technological progress, diffusion of technology and the international differences in labor productivity

Date
1977
Authors
Park, Ae Sil Kim
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Abstract
The neoclassical theory of production suggests that inter-country differences in labor productivity reflect the difference in factor proportions, mainly the capital-labor ratios, used by them. A decade ago, Richard R. Nelson questioned the validity of the neoclassical explanation applied to productivity differences between developed and less developed countries. He argued that the difference would be greater than the capital-labor ratio could explain, and that a key factor explaining productivity differentials would be the existence in less developed countries of large firms using older technology, which had been largely eliminated in the developed countries. He developed a simple two-technology "diffusion" model, tested it for the Colombian-U.S. manufacturing industries, and claimed that the evidence supported his model. The purpose of this study is to test the model developed by Nelson. The model is tested for the comparison of value added per worker between Korea and the United States, Korea and Japan, and Japan and the United States. First, we tested the model by adopting Nelson's method which was used for his empirical test, and then we tested the extended model, which has more variables than the original model, by employing the regression analysis. The data used for the empirical tests was the census of manufactures in the three countries in 1972. We standardized our industrial classification system for international comparability. Basically, our classification of industries follows the international standard industrial classification scheme. The hypothesis tested for the original Nelson model was that the difference in the labor productivity should be the function of the relative size of the modern subsector in a less developed country. The empirical results of the three bilateral comparisons, Korea/U.S., Korea/Japan, and Japan/U.S., supported the hypothesis. However, the test results of the extended model indicated that the relative size of the modern subsector was not a significant variable. The main explanatory variable was the difference in labor productivity between two countries. The main conclusions we derived from this study were: 1. The neoclassical theory provides the explanation for observed differences in labor productivity between the developed countries. 2. However, when the explanations to be made are between developed and less developed countries, the neoclassical explanation appears to be incomplete. 3. Even though the statistical results do not entirely support the diffusion model, they do show more explanatory power than the neoclassical model.
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Typescript.
Thesis (Ph. D.)--University of Hawaii at Manoa, 1977.
Bibliography: leaves 98-103.
Microfiche.
vii, 103 leaves
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Labor productivity
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Related To
Theses for the degree of Doctor of Philosophy (University of Hawaii at Manoa). Economics; no. 1066
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