Productivity growth, convergence, and trade in a panel of manufacturing industries

This paper analyses the determinants of productivity growth in a panel of UK manufacturing industries. Two potential sources of productivity growth are identified: domestic innovation and technology transfer from a frontier economy. We examine the roles played by R & D expenditure and international trade in explaining each source of productivity growth. R & D expenditure is found to raise the domestic rate of innovation, while international trade facilitates the transfer of technologies to the non-frontier economy.