Comovement and catch-up in productivity across sectors: Evidence from the OECD

Abstract

A method for analyzing productivity convergence based on frontier production functions is proposed. It is examined whether departures from the frontierountry{level inefficienciesxhibit long{run relationships and convergence. The method is applied to 1-digit industries of 14 OECD countries from 1970{90. Results suggests that comovements in efficiency are concentrated between the EU{countries. Catch{up is found in all but one sector. Even manufacturing, which previous studies have found not to display convergence, shows signs of catch-up. It is examined whether departures from the frontierountry{level inefficienciesxhibit long{run relationships and convergence. The method is applied to 1-digit industries of 14 OECD countries from 1970{90. Results suggests that comovements in efficiency are concentrated between the EU{countries. Catch{up is found in all but one sector. Even manufacturing, which previous studies have found not to display convergence, shows signs of catch{up.