Pär Hansson

A New Framework for Testing the Effect of Government Spending on Growth and Productivity

Does government spending have a positive or negative effect on economic growth? The results of earlier empirical studies give mixed results. In this study we suggest a new method for testing the effect of different kinds of government expenditure on productivity growth in the private sector. The focus on productivity in the private sector and the use of disaggregated data makes it possible to avoid or mitigate a number of methodological problems.The major conclusions, which are quite robust, are that government transfers, consumption and total outlays have consistently negative effects, while educational expenditure has a positive effect, and government investment has no effect on private productivity growth.The impact is also found to work solely through total factor productivity and not via the marginal productivity of labor and capital.

Exports as an Indicator on or Promoter of Successful Swedish Manufacturing Firms in the 1990s

We study the link between exports and productivity at the firm level. Like in previous studies we get support for the hypothesis that more productive firms self-select into the export market. In addition, and contrary to many of the former studies, we also obtain evidence that exporting further increases firm productivity. Exporting firms appear to have significantly higher productivity than nonexporting. Moreover, exporters—mainly firms that increase their export intensities—have higher output growth than nonexporters. Reallocation of resources between firms may then have contributed to overall manufacturing productivity growth. Hence, we try to quantify the importance of reallocation. JEL no. F10, D24We study the link between exports and productivity at the firm level. Like in previous studies we get support for the hypothesis that more productive firms self-select into the export market. In addition, and contrary to many of the former studies, we also obtain evidence that exporting further increases firm productivity. Exporting firms appear to have significantly higher productivity than nonexporting. Moreover, exporters—mainly firms that increase their export intensities—have higher output growth than nonexporters. Reallocation of resources between firms may then have contributed to overall manufacturing productivity growth. Hence, we try to quantify the importance of reallocation. JEL no. F10, D24

Skill Upgrading and Production Transfer within Swedish Multinationals

This paper studies the link between production transfer within Swedish-headquartered multinational enterprises (MNEs) in the manufacturing industry and skill upgrading in their parent companies in the 1990s. The analysis distinguishes between horizontal and vertical foreign direct investment (FDI). The increased employment share in the affiliates in non-OECD countries (vertical FDI) has a non-trivial, significantly positive effect on the share of skilled labor in the Swedish parents. On the other hand, the parents’ skill upgrading is unrelated to employment changes in their affiliates in other OECD countries (horizontal FDI). This is consistent with implications of the newly developed horizontal MNE models.

Relative Demand for Skills in Swedish Manufacturing: Technology or Trade?*

The rate of change in the share of skilled labor has increased steadily over the past 35 years in Swedish manufacturing. A closer inspection of the period after 1970 indicates that while relative supply changes of skilled labor seem to have been the main driving force behind the growing skill shares in manufacturing industries over the period 1970-85, an acceleration in the relative demand for skills appears to have propelled higher skill shares during the late 1980s and in the beginning of the 1990s. Consistent with such a development is the finding of an increasing degree of complementarity between knowledge capital and skilled labor and that Swedish manufacturing firms, in recent years, have invested heavily in R&D. There is also some support for the belief that intensified competition from the South has increased the relative demand for skilled labor. However, the impact appears to be small and concentrated to the 1970s and the beginning of the 1980s.

Technology, Resource Endowments and International Competitiveness

The paper evaluates the impact of technology together with resource endowments and economies of scale on international competitiveness in OECD countries. Knowledge capital stocks are obtained by cumulating R&D expenditure. Results show that competitiveness is determined not only by the R&D activity of the representative firm, but also by the size of domestic industry as well as economy wide stocks of knowledge, indicating the presence of local externalities. Further results point to the importance of economies of scale in R&D internal to the firm and of investment for introduction of embodied technical progress. Finally, the R&D impact differs between high- and low-tech industries as well as among countries.

What Makes a Country Socially Capable of Catching Up

What Makes a Country Socially Capable of Catching Up? —In this study, the authors test whether social capability promotes catching up, the hypothesis that there is technological spillover from leaders to followers. A simple model that captures the hypothesized interaction is presented and tested on an extended sample of countries. The stock of human capital and the degree of integration into the world economy are used to measure social capability. Both measures are important in determining the degree to which the catching-up potential is realized. The authors also find an independent effect of increased trade intensity and trade regime on productivity growth.ZusammenfassungWas setzt ein Land gesellschaftlich in den Stand, wirtschaftlich aufzuholen? —In diesem Aufsatz untersuchen die Autoren, ob gesellschaftliche Faktoren das Aufholen fördern, also die Hypothese, daß es unter den Ländern einen technologischen Spillover von den Vorreitern zu den Nachzüglern gibt. Ein einfaches Modell, das diese hypothetische Beziehung enthält, wird vorgestellt und für eine Reihe von Ländern getestet. Die gesellschaftliche Fähigkeit wird durch den Bestand an Humankapital und den Grad der Integration in die Weltwirtschaft gemessen. Beide Maße sind wichtig, um den Grad zu bestimmen, bis zu dem das Aufholpotential realisiert worden ist. Die Autoren ermitteln auch eine unabhängige Wirkung der verstärkten Handelsintensität und des Handelsregimes auf das Produktivitätswachstum.

The Discipline of Imports: The Case of Sweden

In examining the constraints that imports competition imposes on the price-cost margins in Swedish manufacturing industries, the paper addresses two questions: whether the free trade agreement between the EC and EFTA has reinforced the disciplinary effect of imports; and whether there are differences between imports of different origins. My findings support intensified competition from the free trade agreement, even though the disciplinary effect of imports originating from LDCs, Japan and the Asian NICs is larger than the effect of imports from other developed countries.

Catching Up in Industrialized Countries: A Disaggregated Study

In this study we test whether catching up, the hypothesis that there is technological spillover from leaders to followers, is still important among industrialized countries. Since the U.S. is no longer the technological leader in many industries and since catching up, if it still exists, may not operate uniformly across different industries, a disaggregated study is more appropriate. A testable model is developed and a number of tests for the existence of catching up are performed. A major improvement on previous tests is that the level of technology is measured in terms of total factor productivity. The two major conclusions, which are quite robust, are that after 1970 there is no catching up effect left in the tradables sector, while catching up is found for industries in the nontradables sector.

Comparative Costs and Elasticities of Substitution as Determinants of Inter- and Intra-Industry Trade

Intra-industry trade, i.e. the simultaneous imports and exports of the same statistical product group, has become an increasingly important part of world trade, in particular in the exchange of goods among developed countries (for a survey of findings see Tharakan, 1983). This fact has initiated empirical research on the causes of intra-industry trade. Attempts to explain differences in the share of intra-industry trade of total trade among different industries or product groups in terms of characteristics of the product or the market have been made, e.g. for the UK by Greenaway and Milner (1984), for the US by Toh (1982) and Bergstrand (1983), and for a sample of developed economies by Finger and De Rosa (1979), Loertscher and Wolter (1980) and Caves (1981). The explanatory variables used in these studies are generally assumed to capture some aspect of the concept of product differentiation. They include measures based on the statistical classification itself (e.g. subdivisions of the SITC or the BTN), as well as R&D costs, advertising expenditures, product age and measures of concentration and economies of scale. The basic hypothesis is that the higher the degree of product differentiation in an industry, the more intra-industry trade there will be.