International convergence and divergence of material input structures: an industry-level perspective

Abstract

This article analyses whether international material input structures have converged or diverged over time. Pooled variances for 25 industries were obtained from OECD input–output tables in constant prices for nine countries over the period 1971–1990. It is found that high-tech industries were mainly characterized by divergence of material input structures, whereas convergence was found for many low-tech, more mature industries. In line with studies on (labour) productivity growth rates, convergence of material input structures was prevalent in the 1970s, while divergence dominated in the 1980s.

Acknowledgements

We would like to thank Hartmut Kogelschatz for useful discussions on the statistical aspects of our study, and an anonymous referee for useful comments. An earlier version of this article was presented at the International Conference on Input-Output and General Equilibrium: Data, Modeling and Policy Analysis, Brussels, September 2004, and at the 51st North American Meeting of the Regional Science Association International, Seattle, November 2004. Los thanks the Dutch Organization for Scientific Research NWO for financial support.

Notes

¹To be more exact, we propose the reduction in the pooled variance of the material input coefficients of an industry as an indicator of convergence.

²The issue of convergence of technologies has been studied quite extensively, but almost exclusively on the basis of trends in (labour or multifactor) productivity. Baumol (1986) is a classic contribution in this respect.

³Hoen (2002, Chapter 7) contains a first study, approaching the question from the perspective of trade theory, however.

⁴Note that the ratio in Equation 1 is smaller than one.

⁵Appendix B contains a simplified illustration of the calculations involved.

⁶These countries are Australia (AU), Canada (CA), Denmark (DK), France (FR), Germany (GE), Japan (JP), The Netherlands (NL), the United Kingdom (UK) and the United States of America (US). The OECD database also contains a single table for Italy. Since changes in tables are considered, we could not include Italy in our analysis.

⁷We decided to adopt the grouping suggested by OECD (1995, p. 7), except for one table. That is, we included UK (1979) in the third subperiod, whereas OECD (1995) assigned it to the second subperiod. Our grouping yields less variance within groups with respect to timing.

⁸It should be mentioned that the base years used for deflation are not identical for all countries, which may affect our results.