Unlike economies as a whole, manufacturing industries exhibit unconditional convergence in labor productivity. The paper documents this finding for 4-digit manufacturing sectors for a large group of developed and developing countries over the period since 1990. The coefficient of unconditional convergence is estimated quite precisely and is large, at 3.0-5.6 percent per year depending on the estimation horizon. The result is robust to a large number of specification tests, and statistically highly significant. Because of data coverage, these findings should be as viewed as applying to the organized, formal parts of manufacturing.
I am grateful to UNIDO for making the INDSTAT4 data base available. I also thank Cynthia Balloch for research assistance, the Weatherhead Center for International Affairs and the Center for International Development at Harvard for financial assistance, and Daron Acemoglu and Jonathan Temple for very useful suggestions. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
“Unconditional Convergence in Manufacturing,” Quarterly Journal of Economics, 128 (1), February 2013, 165-204.