Technology, Production Factors and Specialization: New Evidence
The IUP Journal of Applied Economics, Vol. 8, Nos. 5 & 6, pp. 128-141, September & November 2009
Posted: 20 Oct 2009
Date Written: October 14, 2009
This paper presents new evidence concerning the relationship between relative factor endowments, productivity and specialization. Using a recently developed dynamic panel data fixed effects estimator, the study evaluates the effect of factor endowments in comparison to the effect of productivity on specialization in different sectors of the economy. The study reveals that productivity has more influence in determining industrial specialization than factor endowment. The study concludes that on average, a developing country’s machinery sector benefits from investment in capital accumulation and technology.
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