GEP Research Paper 03/14
Absorptive Capacity and Frontier Technology: Evidence from OECD Manufacturing Industries
Richard Kneller and Philip A. Stevens
Abstract
The persistence differences in productivity are a notable feature of cross-country data. One explanation given for this variation is the inefficiency with which frontier technology is used due to differences in absorptive capacity. We utilise stochastic frontier analysis to investigate two potential sources of inefficiency: differences in human capital and R&D for nine industries in twelve OECD countries over the period 1973-92. We find that inefficiency in production does indeed exist and it depends upon the level of human capital of the country's workforce. Evidence that the amount of R&D an industry undertakes is also important is less robust.
Issued in June 2003.
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