Is the convergence of the manufacturing sector unconditional?

Abstract

In Unconditional Convergence, Rodrik (2011b) documented that manufacturing industries exhibit unconditional convergence in labor productivity. We provide a novel semi-parametric specification for convergence equations and show that the speed of convergence varies systematically with country-specific characteristics. We consider the flexible smooth transition model with multiple transition variables, which allows each group to have distinct dynamics controlled by a linear combination of known variables. We found evidence that the laws of motion for industry productivity growth are different across countries, varying with political institutions. The speed of convergence also has a non-monotonic relationship with trade openness and education.

Keywords

• Unconditional convergence
• Semiparametric models
• Productivity growth