Author would like to thank two anonymous referees for their helpful comments and suggestions on an earlier version of this paper. Part of the paper was written when the author was a visiting scholar at University of California, Berkeley where she conducted the research under the programme of the Polish Ministry of Science and Higher Education “Mobility Plus”.
THE IMPACT OF DOMESTIC AND FOREIGN COMPETITION ON SECTORAL GROWTH: A CROSS-COUNTRY ANALYSIS
Article first published online: 23 JAN 2014
© 2014 Board of Trustees of the Bulletin of Economic Research and John Wiley & Sons Ltd
Bulletin of Economic Research
How to Cite
Joanna, W.-D. (2014), THE IMPACT OF DOMESTIC AND FOREIGN COMPETITION ON SECTORAL GROWTH: A CROSS-COUNTRY ANALYSIS. Bulletin of Economic Research. doi: 10.1111/boer.12022
- Article first published online: 23 JAN 2014
- Manufacturing sector;
This paper examines the impact of competition on the total factor productivity (TFP) of 21 manufacturing sectors in eighteen OECD countries over the period of time 1990–2006. We assume that the source of TFP growth can be either domestic or foreign innovation or technology transfer from the technological frontier. Trade openness, R&D, and human capital can have two effects: a direct effect on TFP (e.g., through innovation) and an indirect effect depending on the productivity gap between a given country and the technological frontier. We find that tougher domestic competition is always associated with higher sectoral productivity. Both import and export penetrations are positively associated with an increase of TFP. However, the channels through which higher TFP is materialized are different: export penetration works through level effect, while import penetration acts mainly when conditional on the level of technological development. The economical magnitude of the effect is not trivial.