Among the determinants of trend productivity growth, R&D has a long history and the role for trade to affect productivity growth a somewhat more recent one. 41 Finding a positive correlation between R&D and productivity growth has been challenging—which has been disappointing for policymakers who want to support R&D as a way to enhance growth. The conclusion of the most recent work that links together trade and R&D is relevant for both the conclusions about policy synergies as well as the recommendations of the KBE report:
Innovation policies are not enough to spur productivity growth; innovation must take place in an environment of open trade and investment to reap the reward of productivity growth. 42 Aggregate and global benefits of the New Economy There are several ways to approach modeling the potential economic benefits of engaging in policy reforms that yield New Economy performance. This section reviews three different approaches: Econometric analysis of time-series data that quantifies the macroeconomic benefits achieved from increased economic efficiency associated with the diffusion of network technologies into business; 41 Work by Bartelsman, Eric (1990), op. cit.
Griliches, Zvi (1986), “Productivity, R&D, and Basic Research at the Firm Level in the 1970s,” American Economic Review, vol.76no.1, March. Griliches, Zvi and Frank Lichtenberg (1984), “R&D and Productivity at the Industrial Level: Is there Still a Relationship?” in Zvi Griliches, ed. R&D, Patents, and Productivity, Chicago: University of Chicago Press, and Perelman, Sergio (1995), “R&D, Technological Progress and Efficiency Change in Industrial Activities,” Review of Income and Wealth, series 41, no. 3, September, focus on R&D and productivity.
On the trade side, the tendency has been to consider only the role for imports or the role for exports, depending on the level of detail of the examination. On a sectoral basis, data on imports and exports are generally available —see Mann, Catherine L. (1998), “Globalization and Productivity Growth in the United States and Germany,” in Stanley Black, ed. Globalization, Technological Change, and Labor Markets , Boston:
Kluwer Academic Publishers, pp 17 – 41 and (1997), “Trade, Technology, and the American Worker,” manuscript, Institute for International Economics, December 19, 1997, on how exports and imports affect the growth rate of industry-sector labor productivity using disaggregated data. At the plant-level, which is becoming de rigor for such analysis, import data are not available. See Jensen, J. Bradford and Nathan Musick (1996), "Trade, Technology, and Plant Performance," ESA/OPD 96-4, U.S. Dept of Commerce, Economics and Statistics Administration, February, Bernard, Andrew B. and J.
Bradford Jensen (1997), “Exporters, Skill Upgrading, and the Wage Gap,” Journal of International Economics, February, p 3-31, and Baily, Martin Neil and Jans Gersbach (1995), "Efficiency in Manufacturing and the Need for Global Competition," BPEA --Microeconomics. Other analysis on the trade side include: Bayoumi, Tamim, Coe, David T., and Helpman, Elhanan (1996), R&D Spillovers and Global Growth . NBER Working Paper Series 5628. Cambridge, MA: National Bureau of Economic Research, (who use simulations with Multimod), and Helpman, Elhanan. 1997. R&D and Productivity: The International Connection. NBER Working Paper Series 6101. Cambridge, MA: National Bureau Economic Research. Nadiri, M.
Ishaq, and Kim, Seongjun. International R&D Spillovers, Trade and Productivity in Major OECD Countries . NBER Working Paper Series 5801. Cambridge, MA: National Bureau of Economic Research. See also OECD ECO/CPE/WP1(93)6.) Finally, for the key complementary role of institutions, see George R.G. Clarke, “How the Quality of Institutions Affects Technological Deepening in Developing Countries,” Working Paper 2603, Washington: World Bank, April 25, 2001. 42 The work by the RBA and Australian Treasury, and for the OECD countries overall by Baygan, Gunseli and Catherine L.
Mann (2000), “Technological Sophistication and Labor Productivity in the OECD” presented ASSA, manuscript IIE, November suggest that higher labor productivity is associated with greater openness. - 30-