Stephen J. Redding

Technological convergence, R&D, trade and productivity growth

This paper analyses productivity growth in a panel of 14 United Kingdom manufacturing industries since 1970. Innovation and technology transfer provide two potential sources of productivity growth for a country behind the technological frontier. We examine the roles played by research and development (R&D), international trade, and human capital in stimulating each source of productivity growth. Technology transfer is statistically significant and quantitatively important. While R&D raises rates of innovation, international trade enhances the speed of technology transfer. Human capital primarily affects output through private rates of return (captured in our index of labour quality) rather than measured TFP.

History and Industry Location: Evidence from German Airports

A central prediction of a large class of theoretical models is that industry location is not uniquely determined by fundamentals. Despite the theoretical prominence of this idea, there is little systematic evidence in support of its empirical relevance. This paper exploits the division of Germany after World War II and the reunification of East and West Germany as an exogenous shock to industry location. Focusing on a particular economic activity, an air hub, we develop a body of evidence that the relocation of Germanys air hub from Berlin to Frankfurt in response to division is a shift between multiple steady states.

The Empirics of New Economic Geography

Although a rich and extensive body of theoretical research on new economic geography has emerged, empirical research remains comparatively less well developed. This paper reviews the existing empirical literature on the predictions of new economic geography models for the distribution of income and production across space. The discussion highlights connections with other research in regional and urban economics, identification issues, potential alternative explanations and possible areas for further research.

Wholesalers and Retailers in US Trade

International trade models typically assume that producers in one country trade directly with final consumers in another. In reality, of course, trade can involve long chains of potentially independent actors who move goods through wholesale and retail distribution networks. These networks likely affect the magnitude and nature of trade frictions and hence both the pattern of trade and its welfare gains. To promote further understanding of the means by which goods move across borders, this paper examines the extent to which US exports and imports flow through wholesalers and retailers versus producing and consuming firms.(This abstract was borrowed from another version of this item.)

Evolving Patterns of International Trade

Theoretical models of growth and trade suggest that patterns of international specialization are dynamic and evolve endogenously over time. Initial comparative advantages are either reinforced or gradually unwound with the passage of time. This paper puts forward an empirical framework for modeling international trade dynamics that uses techniques widely employed in the cross-country literature on income convergence. On applying this framework to industry-level data, evidence is found for significant differences in international trade dynamics among the G-5 economies.

Integration and Industrial Specialisation in the European Union

This paper analyses the industrial structure of the European Union. Our results show that from 1980 onwards, the industrial structures of EU economies have become increasingly dissimilar. In contrast, results for individual industries are more varied. Some industries have become more concentrated, while others have dispersed. Regression results suggest that both comparative advantage and economic geography forces are driving these changes. Despite these findings, a comparison with the US shows that EU industry remains less concentrated suggesting that there may be someway to go before the relocation process reaches its limit.

Productivity Convergence and International Openness

There is a strong partial correlation between openness and rates of productivity growth across UK manufacturing sectors. The paper investigates the relationship more formally, within a theoretical model of productivity catch-up. The model identifies three potential effects of international openness: openness may affect (a) domestic rates of innovation, (b) the quantity of technological know-how that may be transferred from the frontier to the less advanced economy, (c) the rate at which this technology transfer occurs. From the theoretical framework, an econometric equation is derived which is used to estimate the relationship between UK productivity growth, the UK-US productivity gap and the degree of international openness. International openness is found, primarily, to affect the rate of productivity convergence, and this relationship is robust to the inclusion of information on R&D intensity, human capital, unionisation and capacity utilisation.

Persistence and Mobility in International Trade

The theoretical literature on endogenous growth and international trade suggests that comparative advantage is endogenous. Sector-specific learning by doing and technology transfer respectively provide reasons why initial patterns of international specialization may persist or exhibit mobility over time. This paper evaluates the extent of persistence or mobility in trade in manufactured goods in Germany and the United Kingdom for the period 1970–93. A measure of the extent of specialization is presented and its evolution over time modelled as a sequence of cross-section distributions. Evidence of considerable mobility is found, with the degree of mobility in the United Kingdom exceeding that in Germany.

Economic Geography: A Review of the Theoretical and Empirical Literature

This paper reviews the new economic geography literature, which accounts for the uneven distribution of economic activity across space in terms of a combination of love of variety preferences, increasing returns to scale and transport costs. After outlining the canonical core and periphery model, the paper examines the empirical evidence on three of its central predictions: the role of market access in determining factor prices, the related home market effect in which demand has a more than proportionate effect on production, and the potential existence of multiple equilibria. In reviewing the evidence, we highlight issues of measurement and identification, alternative potential explanations, and remaining areas for further research.

The Uneven Pace of Deindustrialisation in the OECD

Throughout the OECD, the period since the 1970s saw a secular decline in manufacturings share of GDP and a secular rise in the share of services. Despite this being a central feature of growth, the economic forces behind deindustrialisation and the reasons why its pace varied so markedly across OECD countries are not well understood. Adopting an econometric approach founded in neoclassical production theory, we provide an empirical analysis of the role of changes in relative prices, technology and factor endowments in driving changes in production structure. The speed of adjustment to changes in these determinants of production structure varies across OECD countries and is correlated with levels of employment protection.