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Sectoral analysis of productivity in the developing and developed economies of Asia-Pacific

Pami Dua (Department of Economics, University of Delhi, New Delhi, India)
Niti Khandelwal Garg (Kirori Mal College, University of Delhi, New Delhi, India)

Indian Growth and Development Review

ISSN: 1753-8254

Article publication date: 17 September 2019

Issue publication date: 22 April 2020

Abstract

Purpose

The study aims to empirically investigate the trends and determinants of labour productivity of the two broad sectors –industry and services – and their components, namely, manufacturing and market services sectors, in the case of major developing and developed economies of Asia-Pacific over the period 1980-2014 and make a comparison thereof.

Design/methodology/approach

The study uses econometric methodology of panel unit root tests, panel cointegration and group-mean full modified ordinary least squares (FMOLS).

Findings

The study finds that while capital deepening, government size, institutional quality, productivity of the other sector and financial openness affect productivity of all the sectors significantly, the impact of human capital and trade openness varies across sectors in the case of developing economies. Furthermore, the impact of technological progress becomes significant in the post-liberalization reforms period in the developing economies. The study further finds that capital deepening, human capital, government size, institutional quality, productivity of the other sector, government size and trade openness are significant determinants of productivity of all sectors of developed economies under consideration. However, the impact of technological progress is stronger for manufacturing sector than services and its components. Furthermore, while both equity and debt liabilities (as measures of financial openness) influence sectoral productivity of industry and manufacturing sectors positively and significantly in case of developed economies, only equity liabilities have a significant influence on the productivity of developing economies. This may indicate existence of more developed financial markets in the case of developed economies.

Originality/value

The study identifies important structural differences in determinants of productivity both across sectors and across developing and developed economies of Asia-Pacific.

Keywords

Acknowledgements

The authors specially thank Dr Deb Kusum Das for his valuable comments as discussant of an earlier version of the paper in the above conference. The authors sincerely thank the editors of the journal, Dibyendu Maiti and Surender Kumar and an anonymous referee for their helpful comments and suggestions. The feedback of the participants of the conference on “Growth and Productivity of Indian Economy: Contemporary Issues” held at Delhi School of Economics is gratefully acknowledged. The authors are also indebted to Prof Jacob Madsen for kindly providing the historical data series on patent applications in China.

Citation

Dua, P. and Garg, N.K. (2020), "Sectoral analysis of productivity in the developing and developed economies of Asia-Pacific", Indian Growth and Development Review, Vol. 13 No. 1, pp. 37-71. https://doi.org/10.1108/IGDR-09-2018-0091

Publisher

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Emerald Publishing Limited

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