The authors would like to thank Mary O'Mahony, Martin Weale and participants at the NEISR/ESRC conference on ‘The Role of Efficiency as an Explanation of International Income Differences’ of 13 September 2002 for useful comments. Financial support for Philip Stevens is provided by the ESRC under the grant no. R000223494. Richard Kneller is grateful to The Leverhulme Trust for financial support under Programme Grant F114/BF.
Frontier Technology and Absorptive Capacity: Evidence from OECD Manufacturing Industries*
Article first published online: 2 FEB 2006
Oxford Bulletin of Economics and Statistics
Volume 68, Issue 1, pages 1–21, February 2006
How to Cite
Kneller, R. and Stevens, P. A. (2006), Frontier Technology and Absorptive Capacity: Evidence from OECD Manufacturing Industries. Oxford Bulletin of Economics and Statistics, 68: 1–21. doi: 10.1111/j.1468-0084.2006.00150.x
- Issue published online: 2 FEB 2006
- Article first published online: 2 FEB 2006
- Final Manuscript Received: May 2005
In this paper, we examine the three facets of technology: its creation, dispersion and absorption. We investigate whether differences in absorptive capacity help to explain cross-country differences in the level of productivity. We utilize stochastic frontier analysis to investigate two potential sources of this inefficiency – differences in human capital and R&D – for nine industries in 12 Organization for Economic Co-operation and Development (OECD) countries over the period 1973–91. We find that inefficiency in production does indeed exist and it depends upon the level of human capital of the country's workforce. Evidence that the amount of R&D an industry undertakes is also important is less robust.