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The impact of domestic and foreign competition on sectoral growth: a cross-country analysis

Abstract

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

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Category:
Articles
Type:
artykuł w czasopiśmie wyróżnionym w JCR
Published in:
BULLETIN OF ECONOMIC RESEARCH no. 66, edition S1, pages 110 - 131,
ISSN: 0307-3378
Language:
English
Publication year:
2014
Bibliographic description:
Wolszczak-Derlacz J.: The impact of domestic and foreign competition on sectoral growth: a cross-country analysis// BULLETIN OF ECONOMIC RESEARCH. -Vol. 66, iss. S1 (2014), s.110-131
DOI:
Digital Object Identifier (open in new tab) 10.1111/boer.12022
Verified by:
Gdańsk University of Technology

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