male female urban income distributions in canada the service sector in a dependency model international trends of increasing income inequality have not occurred equally for male and female income distributions in canadian cities urban male income inequality declined from 1970 to 1980 it increased in the next decade but only to its 1990 level female income inequality has declined consistently these urban income distributions can be well explained using a dependency model in which the female income distribution is influenced by the male income distribution and the income gap between males and females this dependence effect is modified by urban characteristics male and female income distributions are more alike in larger cities and in cities with relatively higher female median incomes beginning in 1990 service sector employment contributes significantly to income inequality for both gender groups with a slightly greater effect for females

structural transformation the mismeasurement of productivity growth and the cost disease of services if workers self select into industries based upon their relative productivity in different tasks and comparative advantage is aligned with absolute advantage then the average efficacy of a sector s workforce will be negatively correlated with its employment share this might explain the difference in the reported productivity growth of contracting goods and expanding services instrumenting with defense expenditures i find the elasticity of worker efficacy with respect to employment shares is substantially negative albeit estimated imprecisely the estimates suggest that the view that goods and services have similar productivity growth rates is a plausible alternative characterization of growth in developed economies jel e23 e24 h56 j24 o41 o47 one of the strongest and seemingly most accurate characterizations of the process and problems of growth in advanced economies is william baumol s cost disease of services baumol s argument begun in papers as early as 1965 and continuing to this very day e g baumol and bowen 1965 baumol 1967 baumol blackman and wolff 1985 and baumol 2012 starts from the premise that productivity growth is inherently more difficult to achieve in the production of services than in the pro

does governance matter keiretsu alliances and asset specificity as sources of japanese competitive advantage this empirical study suggests that japanese competitive advantage in complex product industries is at least partly due to differences in value chain governance and interfirm asset co specialization comparative data are offered which indicate that u s firms rely largely on markets and hierarchies to facilitate exchange whereas japanese firms rely largely on hybrid governance or alliances the empirical findings suggest that japanese automotive firms value chains have been able to achieve a competitive advantage over their u s counterparts by effectively using hybrid alliance governance for three primary reasons 1 japanese automotive value chains are characterized by greater interfirm asset co specialization than u s chains in particular greater human asset co specialization between firms results in superior coordination information sharing and learning which is critical in complex product industries 2 hybrids alliances as employed by japanese automakers realize virtually all of the advan

energy demand and the composition of output growth abstract using the theory of the firm the effects of unbalanced rates of output growth on aggregate energy demand are examined theoretical results show that failure to consider unbalanced growth leads to bias in aggregate price elasticity estimates empirically differential output growth rates are important contributors to the overall growth of energy and other inputs they can be as important as net price effects in explaining input growth unbalanced growth effects help to explain changes in labor s productivity growth and have increased in importance since the arab oil embargo they are quite significant relative to other sources of change during business cycle downturns

sources of aggregate labour productivity growth in canada and the united states abstract in this paper we propose a decomposition technique to examine the sources of industrial contribution to aggregate labour productivity growth we show that in terms of pure labour productivity growth the manufacturing and service sectors contributed equally to the aggregate canada u s labour productivity growth gap during the 1987 98 period but in terms of total industrial contributions which also take into account the contributions from a change in relative size the service sector was the largest contributor we also find that high labour productivity growth industries did not attract resources from stagnant industries a phenomenon consistent with baumol s cost disease of stagnant industries jel classification o47 c43

the drivers of structural change the main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture manufacturing and services using the ggdc 10 sector database this paper first presents the empirical facts associated with structural change in different regions of the world that is europe and the usa asia latin america and africa then reviews four determinants of structural change i changes in income ii changes in relative sectoral prices iii changes in input output linkages and iv changes in comparative advantage s via globalization and trade

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

a growing trend toward knowledge work in canada abstract this paper answers three questions related to the growing trend toward knowledge occupations in canada i what was the magnitude of the trend between 1971 and 1996 ii was the trend a widespread phenomenon or was it restricted to specific industries iii what are the proximate causes of the trends using five censuses 1971 1981 1986 1991 1996 and the input output i o data the paper provides evidence that the canadian economy is becoming increasingly knowledge based although the upgrading trends differ across knowledge occupations moreover we find that this phenomenon is spread across all industrial sectors finally using a decomposition analysis borrowed from wolff and baumol three factors the substitution effect the productivity lag effect and the demand effect have been examined in order to shed some light on these trends we find that these effects vary according to the nature of the knowledge involved in these different groups of occupations thus reflecting not only the importance of the technological change skill bias but also the increasing complexity of controlling and managing the new economic activities

antecedents and performance implications of channel integration in foreign markets this study enhances our understanding of channel integration in foreign markets on two fronts first the eclectic approach to foreign entry mode proposed by hill hwang and kim 1990 and kim and hwang 1992 is used to examine transaction specific organizational capability and strategic factors that influence channel choices in foreign markets empirical results based on survey of u s firms support the combined relevance of these factors in predicting the degree of channel integration second the study empirically examines the performance consequences of channel integration the results suggest that although the degree of channel integration does not have a direct influence on channel performance a contingency model based on the fit between the contextual factors and the actual channel choice is significantly related to performance in foreign markets

the role of manufacturing in regional growth harris r i d 1987 the role of manufacturing in regional growth reg studies 21 301 312 since a shift in regional policy away from manufacturing to aiding services is being advocated this paper re examines the role of manufacturing in regional growth from both an empirical and theoretical viewpoint first of all it discusses the importance of manufacturing s share of output concluding that in output terms and prior to 1979 manufacturing has not been displaced by services in shares of total output secondly the paper focuses on the theoretical importance of manufacturing to the growth of regional output showing that for most theories demand side growth pole cumulative causation manufacturing is the natural base for growth potential harris r i d 1987 le role des industries de fabrication dans la croissance regionale reg studies 21 301 312 vu que l on propose une reorientation de la politique regionale au depens des industries de fabrication et en faveur du tertiaire cet article

industrial composition interindustry effects and the u s productivity slowdown this paper investigates the effect of shifts in output composition on the slowdown of productivity growth in the united states between 1947 67 and 1967 76 i employ a leontief input output framework and a divisia index of aggregate productivity growth to separate the effects of changes in sectoral rates of technical progress from the effects of changes in output composition and interindustry flows on the change in overall productivity growth of the approximately 2 percentage point decline in overall total factor productivity growth 17 to 22 was due to compositional effects and the remainder to other factors t he importance of shifts in input or output composition in explaining the recent productivity slowdown in the united states has been a source of some controversy estimates of such shift effects vary considerably for example gollop 1982 calculated that resource shifts were actually an offset to the slowdown in productivity growth kutscher mark and norsworthy 1977 estimated that employment shifts had no effect on productivity growth thurow 1979 ascribed half of the slowdown between 1965 72 and 1972 77 to employment shifts and nordhaus 1972 attributed 77 of the decline from 1948 55 to 1965 71 to employment shifts in a related paper the possible reasons for these disparate results were discussed at length see baumol and wolff forthcoming briefly these differences stem primarily from the use of different concepts and measures actually three different concepts are used in the literature the first is a resource allocation or equilibrating shift effect which measures the increase in productivity that can result from a more efficient allocation of resources cf denison 1979a 1979b and 1984 norsworthy harper and kunze 1979 and gollop 1982 while interesting in itself this resource reallocation effect is a somewhat limited notion measuring the movement toward the efficient frontier instead of the outward movement of the frontier over time the second concept is the so called level effect which assesses the effect of resource shifts on overall productivity growth by holding constant the productivity levels of the various sectors of the economy cf nordhaus 1972 kutscher mark and norsworthy 1977 and thurow 1979 this measure was found to be quite arbitrary depending on the arbitrary choice of base year used in the computation the third is the so called rate effect which assesses the effect of shifts in resources by holding constant sectoral rates of productivity growth cf nordhaus 1972 baily 1982 and gollop 1982 all three authors found that the rate effect had a negligible influence on the productivity slowdown this measure is the most theoretically sound of the three and my measure will fall in this category though differ in significant ways from previous formulations and show a greater effect on overall productivity growth from compositional changes i shall first develop a general model to measure such shifts or composition effects from a leontief input output framework sections i and ii results for the u s economy over the 1947 76 period will then be reported with particular emphasis on accounting for the productivity slowdown after 1967 sections iii iv and v conclusions and a comparison with other results will be discussed in section vi vii and viii i the standard model following the work of peterson 1979 let us define x column vector of gross output by sector at time t y column vector of final demand by sector at time t at matrix of inter industry technical coefficients at time t it row vector of labor coefficients at time t showing employment per unit of output kt row vector of capital stock coefficients at time t showing the capital stock required per unit of output p row vector of prices at time t showing the price per unit of output of each industry received for publication june 27 1983 revision accepted for publication october 19 1984 new york university i would like to express my appreciation to wassily leontief william baumol m i nadiri mark schankerman martin baily and andrew sharpe for helpful comments and to the division of information science and technology of the national science foundation for financial support

new goods and the measurement of real economic growth measured economic growth has slowed in advanced economies since the mid 1970s a number of explanations have been advanced one being that the slowdown is an artifact of the statistical system in particular one suspected source of error is the way the statistical system deals with the new kinds of information products that are central to the current wave of technical change these goods are often produced with dramatic and historically unprecedented increasing returns to scale hence their introduction is followed by a considerable period of falling prices much of which may be going unmeasured given the usual lags before new products enter the commodity baskets on which price deflators are based in addition there is a general sense that the pace of technical change has been accelerating the conjecture is that the benefits of this very novelty and the increased range of choice are going unmeasured and that these factors are becoming more important over time diewert and fox 1997 a number of analyses have sought to quantify the extent to which new goods are a source of bias in price measurement and also therefore in the measurement of real i e deflated economic growth e g diewert 1996 grilliches 1996 u s senate boskin et al advisory commission 1996 crawford 1993 the consensus is that there is an upward bias on the order of half a percent per annum however the boskin commission considered only the product cycle biases arising from unmeasured price declines that occur after a commodity first appears on the market their estimates do not include any measure of the novelty of new goods as such nor the effects due to differential impacts by income group to aid our thinking we have constructed a simplified model of an economy and then used this to explore the effects of introducing new goods on various measures of real economic growth 2 our model xecon for experimental economy includes both utility loving individuals and profit motivated firms xecon also includes a statistician who computes several variants of the time series of real gdp based on alternative empirical price deflators finally xecon has an omniscient creator who can measure social welfare and compute true standard of living indices

strategic flexibility in information technology alliances the influence of transaction cost economics and social exchange theory utilizing a model drawn from both transaction cost economics and social exchange theory we analyze determinants of strategic flexibility in a sample of strategic alliances involved in joint development agreements or joint research pacts findings indicate that in general determinants suggested by transaction cost economics provided flexibility in modification and inflexibility in exit from social exchange theory trust was found to be positively related to both types of flexibility while another component of social exchange theory dependence was found to be negatively related to the strategic flexibility of the alliance results also found that factors suggested by both transaction cost economic theory and social exchange theory were related to the concept of trust economic constraints as suggested by transaction cost economics were positively related to trust between the alliance partners while dependence was negatively related to trust additionally the quality of communication and the existence of shared values were positively related to trust between the exchange partners results provide support for the role of determinants from both transaction cost economics and social exchange theory in the flexibility of strategic alliances

the impact of inward fdi on the performance of chinese manufacturing firms recent years have witnessed the emergence of china as one of the most important destinations for foreign direct investment fdi which reached us 403 98 billion by the end of 1999 moftec 2000 china is now the largest recipient of fdi in the developing world however the amount of fdi will underestimate its overall consequences if spillover effects are significant murphy 1992 o malley 1994 buckwalter 1995 this study investigates the impact of fdi on the performance of chinese locally owned firms in manufacturing

structural change and the kaldor facts in a growth model with relative price effects and non gorman preferences u s data reveal three facts 1 the share of goods in total expenditure declines at a constant rate over time 2 the price of goods relative to services declines at a constant rate over time and 3 poor households spend a larger fraction of their budget on goods than do rich households i provide a macroeconomic model with non gorman preferences that rationalizes these facts along with the aggregate kaldor facts the model is parsimonious and admits an analytical solution its functional form allows a decomposition of u s structural change into an income and substitution effect estimates from micro data show each of these effects to be of roughly equal importance

relative prices and sectoral productivity the relative price of services rises with development a standard interpretation of this fact is that productivity differences across countries are larger in manufacturing than in services the service sector comprises heterogeneous categories we document that many disaggregated service categories such as transportation communication and finance feature a negative income elasticity of relative prices whereas the relative price of aggregate services is mostly driven by large expenditure categories in housing collective government and health that feature a positive income elasticity of relative prices we also document a substantial reallocation of expenditures in services from categories with positive income elasticities traditional services to categories with negative elasticities non traditional services as income rises using an otherwise standard multi sector development accounting framework extended to include an input output structure we find that the cross country income elasticity of sectoral productivity is large in non traditional services 1 15 smaller in manufacturing 1 05 and much smaller in traditional services 0 67 eliminating cross country productivity differences in non traditional services reduces aggregate income disparity by 58 percent a 7 9 fold reduction in aggregate productivity differences we also find that the heterogeneity between traditional and non traditional services has a substantial impact on aggregate productivity and that the input output structure is important in this assessment

the modest environmental relief resulting from the transition to the service economy a service transition is supposed to lead to the decline of energy intensity energy gdp we argue that this interpretation is overly optimistic because the shift to a service economy is somewhat of an illusion in terms of real production several recent studies of structural effects on energy intensity have made the error of using sector shares in current prices combined with gdp in constant prices which is inconsistent and ignores the different behaviour of prices across sectors we use the more correct method of sector shares in constant prices and make an attempt to single out the effect from the real service transition by using two complementary methods shift share analyses in current and constant prices and logarithmic mean divisia index lmdi for 10 developed and 3 emerging economies a service transition is rather modest in real terms the major driver of the decline in energy intensity rests within the manufacturing sector meanwhile the transition to a service sector had a small downward impact on energy intensity in 7 of the developed countries and no impact in the others for emerging economies like brazil mexico and india it is the residential sector that drives energy intensity down because of the declining share of this sector as the formal economy grows and as a consequence of switching to more efficient fuels less

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

knowledge dynamics structural change and the geography of business services the article provides a review of and presents some empirical evidence on the dynamics of knowledge structural change and spatial concentration of economic activities focusing on the case of business services it explores how the role of knowledge has evolved in relation to the dimensions of i science technology and structural change ii the long term processes of tertiarisation of the economy in particular the growth of business services iii the spatial concentration of business services as an outcome of the increasing volume and complexity of knowledge and the need to manage it through spatial proximity our arguments are supported by empirical evidence on the spatial concentration of business services in the european regions

interfirm diversity organizational learning and longevity in global strategic alliances organizational theorists have correctly argued that the emergence and maintenance of robust cooperation between global strategic alliance partners is related to the diversity in the partners characteristics yet previous research has failed to systematically delineate the important dimensions of interfirm diversity and integrate the dimensions into a unified framework of analysis this paper develops a multilevel typology of interfirm diversity and focuses on organizational learning and adaptation as critical processes that dynamically moderate diversity s impact on alliance longevity and effectiveness

foreign direct investment and de industrialisation the purpose of this study is to discuss the various issues regarding de industrialisation and to systematically analyse the causes of this phenomenon in addition the effect of the recent increase in foreign direct investment on de industrialisation will be analysed unlike extant studies this study employs a more reliable method of estimation known as the generalised method of moments system for establishing the importance of foreign direct investment fdi with regard to de industrialisation for a general assessment of the different factors of de industrialisation including fdi this study classifies the causes of de industrialisation in oecd countries into external and internal factors as a result the analysis has proved that not only internal and external factors are major factors of de industrialisation fdi inflow and outflow are also major factors

winter is coming robert gordon and the future of economic growth this comment assesses the claim of the rise and fall of american growth that for coming decades growth in us tfp will continue the disappointing pace of the last decade while predicting future technological advance is difficult there are indications that gordon may actually be too optimistic on future tfp growth the share of output from manufacturing which still generates the majority of r d expenditures and has historically more rapid tfp growth will continue to fall there are substantial obstacles to rapid tfp advance in much of the rest of the economy construction transport health care and other services

is past prologue prospects for state and local sales tax bases general sales taxes provide substantial fractions of state and local revenues in the us however state and local sales tax bases have been eroding steadily during the past 50 years base erosion contributes to fiscal stress in the states therefore prospects for continued sales tax base erosion are important to state tax administrators policymakers and public finance economists this article offers a quantitative assessment of base erosion we construct time series of a representative state sales tax base and its price index and estimate a structural demand system for taxed and untaxed commodities we use the estimates to forecast the sales tax base over coming years time series forecasts and a weighted average forecast are constructed to reduce the likelihood of forecast error the results suggest slow but relentless base erosion and possible recurring fiscal stress in states where sales tax revenues make up sizable fractions of total tax revenues

learning by doing changes in industrial structure and trade patterns and economic growth in a small open economy abstract this paper presents a simple dynamic model which allows for changes in both industrial structure and trade patterns during the process of economic growth learning by doing in the producer service sector is the source of endogenous growth interesting interdependences between economic growth and the structure of the economy are obtained economic growth is accompanied by changes in industrial structure and comparative advantage while changes in industrial composition of the manufacturing sector accelerate economic growth furthermore this paper analyzes the relationship between economic growth and the endowment structure and the effects of two types of technology transfers on economic growth

service boom in the indian economy an analysis of causal influences the article decomposes the influence behind the growth of service activities in the indian economy over the last three decades into three components the final demand effect input structure effect and reallocation effect and makes empirical assessments thereof in terms of the influences the behaviour of the group of services used basically as intermediate inputs designated as category i services was distinct from the rest of heterogeneous services combined as community social and personal services the study finds that apart from the final demand effect the other two influences too played very important but different roles in different phases of growth

bureaucracy inefficiency and time this paper examines the bureaucrat s choice between devoting resources to economic rents organizational slack and maximizing the budget of the agency a new model of bureaucracy is developed using utility rather than a demand function as its foundation it is shown that increases in income alter the slack budget constraint to favor organizational slack over budget maximization modern federal bureaucracies in the u s are predicted to be slack maximizing and x inefficient

incorporating experience curves in appliance standards analysis the technical analyses in support of u s energy conservation standards for residential appliances and commercial equipment have typically assumed that manufacturing costs and retail prices remain constant during the projected 30 year analysis period there is however considerable evidence that this assumption does not reflect real market prices costs and prices generally fall in relation to cumulative production a phenomenon known as experience and modeled by a fairly robust empirical experience curve using price data from the bureau of labor statistics and shipment data obtained as part of the standards analysis process we present u s experience curves for room air conditioners clothes dryers central air conditioners furnaces and refrigerators and freezers these allow us to develop more representative appliance price projections than the assumption based approach of constant prices these experience curves were incorporated into recent energy conservation standards for these products the impact on the national modeling can be significant often increasing the net present value of potential standard levels in the analysis in some cases a previously cost negative potential standard level demonstrates a benefit when incorporating experience these results imply that past energy conservation standards analyses may have undervalued the economic benefits of potential standard levels

market seeking mnes in an emerging market how parent subsidiary links shape overseas success this study extends research on parent subsidiary links applying new theoretical perspectives those of resource dependence and dynamic capability to the new empirical setting of an emerging market we suggest that parent subsidiary links help to mitigate emerging market threats by reducing external dependence and help to capitalize on emerging market opportunities by enhancing local responsiveness

structural change in advanced nations a new set of stylised facts we provide new evidence on patterns of structural change in advanced economies reconsidering the stylised facts put forward by kaldor 1963 kuznets 1971 and maddison 1980 since 1980 the services sector has overwhelmingly predominated in the economic activity of the european union japan and the us but there is substantial heterogeneity among services personal finance and business services have low productivity growth and increasing shares in employment and gdp by contrast shares of distribution services are constant and productivity growth is rapid we find that the labour share in value added is declining while the use of ict capital and skilled labour is increasing in all sectors and regions

strategic alliance based sourcing and market performance evidence from foreign firms operating in china although foreign multinational firms from the triad regions increasingly use mainland china as both a sourcing and a marketing location no study has directly examined the sourcing strategy performance linkage using resource complementarity and resource dependence theory we extend the sourcing literature and apply these perspectives to an important transitional economy china these two theoretical perspectives suggest that product and uncertainty factors moderate the relationship between strategic alliance based sourcing sa sourcing of major components and market performance we find that at low levels of product innovativeness and technological uncertainty the use of sa sourcing is positively related to market performance however the effects of product differentiation and demand uncertainty on the sourcing performance relationship are insignificant journal of international business studies 2005 36 187 208 doi 10 1057 palgrave jibs 8400120

a logistic growth theory of public expenditures a study of five countries over 100 years this paper offers a new theory and empirical testing of long term trends of public expenditures for five countries while wagner s law would imply an exponential growth process of the ratio between public expenditures and national income g y the law should be rejected both on theoretical and empirical grounds because it disregards the role of ever increasing distortionary taxation however under some conditions the combination of wagner s law and the pigou s conjecture that the excess burden of taxation constrains the growth of public expenditures can be captured by a non linear first order differential equation the equation is the verhulst s logistic originally invented to model malthusian predictions on population growth the integration of a verhulst equation generates an s shaped curve this analytical framework combines intuitions from a welfare economics and a public choice perspective and potentially offers a new research strategy on the dynamics of government expenditures we offer preliminary econometric estimates on long run trends around 1870 1990 of g y in u s u k france germany italy these estimates confirm a pattern of similar trajectories in spite of different national parameters and suggest that the logistic view of growth of government is consistent with observed data

strategic and financial performance implications of global sourcing strategy a contingency analysis using a contingency model of global sourcing strategy this study investigated the moderating effects of sourcing related factors on the relationship between sourcing strategy and a product s strategic and financial performance the results lent some support to the contingency model of global sourcing strategy in that product innovation process innovation and asset specificity were significant moderator variables for financial but not strategic performance however the results provided no support for bargaining power of suppliers and transaction frequency as moderator variables in other words in achieving high financial performance for a product whether a particular sourcing strategy should be used for a particular product depended on the levels of product innovation process innovation and asset specificity

on the rate of return to schooling quality empirical evaluation of the effect of school quality or type and amount of resources per student on adult earnings requires a conceptual framework a model of the returns to schooling in a simple human capital growth context is extended to illustrate how factors such as consumption benefits of students parental concern over equity between siblings and use of schools to facilitate parental labor supply can alter the apparent return to school quality the need for microlevel time diary and other data on human capital formation in both classrooms and families is highlighted copyright 1996 by mit press

learning to compete in a transition economy experience environment and performance does organizational learning as measured by experience in a host country affect international expansion performance if so does such a relationship between experience and performance hold over time how do the environmental forces in the host country affect such a relationship focusing on organizational learning by multinational enterprises mnes operating in a transition economy this study answers these three critical questions by exploring the relationships among experience environment and performance at the subsidiary level based on a recent survey of 108 mne subunits operating in china we find that the intensity and diversity of host country experience is an important predictor of subunit performance while the positive effect of the intensity of experience on performance diminishes over time the impact of the diversity of experience on performance remains unchanged moreover for mnes experiencing greater environmental dynamism complexity and hostility there is a stronger positive relationship between experience and performance

precautionary wealth accumulation a positive third derivative is not enough abstract it is commonly conjectured that expected wealth accumulation increases when earnings risk increases as long as the utility function in each period is increasing concave and has a positive third derivative we present a counter example which highlights the importance of the convexity of the savings function