Indicators of Absorptive Capacity and Import‐induced South–North Convergence in Labour Intensities

Abstract

We hypothesise that North–South trade is associated with knowledge spillovers that create labour productivity gains depending on various aspects of Southern absorptive capacity. We use the novel World Input–Output Database (WIOD) that provides bilateral and bisectoral panel data for 39 countries and 35 sectors for 1995–2009. We examine growth in relative South–North labour intensities (South–North convergence) for 31 industrialised source and eight emerging recipient countries. We find strong evidence that various components and individual indicators of absorptive capacity interact with imports of investment goods in such a way that the relative labour intensity is reduced. GMM and GLS estimations corroborate the results. Policies that improve various of the identified aspects of absorptive capacity are more promising than policies that select only one. Elevating the absorptive capacity of emerging economies to the maximum level in the world would halve the South–North gap in labour intensities within a couple of decades if it were solely achieved through the trade channel.

The challenge of the creative Third World

“…22 Even today the richer the South becomes, the better off is the West. 23 The 'civilising mission' inherent when more developed nations encounter less developed ones was eagerly embraced by most Third World people, who, like the indigenous peoples in North America and Australia, migrated to areas of more intensive colonisation. (This included virtually the entire population of Hong Kong.…”

Determinants of Absorptive Capacity: a systematic literature review

“…Table 2 shows the number of papers selected in the databases in detail. From the selected articles, 18.33% (11 articles) of the sample presented a nationwide study population, encompassing several countries (ALDIERI et al, 2018;FOSTER-MCGREGOR et al, 2017;KHORDAGUI;SALEH, 2016;HUEBLER et al, 2016;KRAMMER, 2010;KELLER, 2010). These articles will be analyzed separately since the study population of countries is our focus of study.…”

“…According to this author, the HDI affects AC because skills can be acquired through training and professional experience, and this acquisition of skills is further supported by Thus, the countries that are able to absorb more knowledge are also those that are able to achieve higher life expectancy, higher education level and higher incomes. Regarding the determinant Index of Economic Freedom (IEF), cited by Huebler et al (2016), it can be said that in economically free societies, governments allow labor, capital and goods to move freely, and this freedom to do business, including in technology-oriented areas, facilitates innovation and adoption of new technologies. According to Elmawazini (2014), productivity gains will be linked to the Absorptive Capacity, since innovative producers are more receptive to new technologies and, thus, are able to maximize gains and reduce costs.…”

The Future of Foreign Aid in a Globalizing World with Climate Change

“…It can furthermore be improved via aid and investments directed to infrastructure and connectivity. Therein, access to information and telecommunication technologies and the Internet will play a central role (H€ ubler and Hartje, 2016). While NGOs should play a vital role in improving the absorptive capacity and transferring technologies, private investments are key.…”

“…On the contrary, other developing countries, such as Sub-Saharan African countries, have failed to catch-up to the industrialized countries (The Economist, 2014). In this context, the improvement of the absorptive capacity 3 via foreign aid is a key for successful technology diffusion (H€ ubler, 2011, H€ ubler et al, 2015Glas et al, 2016;Keller, 1996).…”