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• The long waves of Kondratiev and Schumpeter have been absent from the current debate on declining business dynamism. • Based on extensive microeconomic data from 1986 to 2018, the study examines how the ICT revolution has influenced business dynamism. • There are two structural breaks in industrial dynamics in Portugal: an upswing in 1993 and a downturn in 2003. • Counterfactual estimates show that entry and survival become more stringent in the mature stage of a technological revolution, thereby reducing entrepreneurship's long-term disruptive potential. Following Schumpeter, several scholars have shown that development follows long-term waves. These waves are prompted by radical innovations, which, until their full potential is exhausted, spread through incremental innovations and continuous learning and imitation processes. However, the discontinuity of technological progress often goes unnoticed in current debates on productivity slowdown, declining business dynamism and increasing market concentration. Our study, based on extensive microeconomic data from 1986 to 2018, examines how the ICT revolution has influenced business dynamism in Portugal. The Bai–Perron estimates show two structural breaks in industrial dynamics: an upswing in 1993 and a downturn in 2003. Our research also shows that during the late 20th century creative destruction was mainly driven by the expanding ICT sector. After 2003, however, firm dynamics became less turbulent, with less entry and job reallocation. Moreover, despite the increasing performance of a typical high-growth young firm, the incidence of startups has declined in the new century. Our results, therefore, suggest that reduced entry and increased exit risk have likely undermined the long-term disruptive potential of transformative entrepreneurship. [ABSTRACT FROM AUTHOR]

• Most papers show that the Paris Agreement (PA) has led to decline in global emissions. • However, it is not clear whether this is due to efficiency gains or economic decline. • We adopt a treatment method to study impact of the PA on global emissions intensity. • Our results show a 4.1% decline in global emissions intensity driven by the PA. • We also find that some countries might be too poor to achieve reductions under the PA. Dozens of studies point to evidence of significant reductions in carbon emissions driven by climate agreements, such as the Paris climate agreement. However, these studies fail to answer a pertinent question, that is, are global carbon emission reductions due to reduced production activities or are production processes becoming more efficient as less carbon is emitted per unit output due to technical progress? Such an understanding is important to evaluate the tension between environmental quality and economic growth. Therefore, drawing on difference-in-differences approaches, our results suggest a significant decline in global carbon emission intensity due to the 2015 Paris climate agreement, which is estimated at a 4.1% reduction on average over the sample period. Our evidence also shows that while some countries may be too poor to generate meaningful outcomes from climate agreements, the associated rate of reduction in carbon intensity in others tends to decline above a certain income threshold. These results imply that although there has been a worldwide increase in production efficiency and technical progress, at least owing to the Paris climate agreement, reaching net zero carbon emissions globally requires new approaches, especially for the very poor countries relative the ones at the top of the income ladder. [ABSTRACT FROM AUTHOR]

• Examining impact of internet on allocative efficiency of factors of production. • Study of Chinese manufacturing industry 1998 to 2013 for 29 provinces. • IV based on historical data of landline phones against potential endogeneity. • Internet improves capital and labour allocative efficiency. • Heterogeneous effects in different industries and stronger in low-tech industries. Using data from the Annual Survey of Industrial Firms conducted from 1998 to 2013 in China, this study examines whether the expansion of the Internet improves the allocative efficiency of production factors in manufacturing industry. Allocative efficiency is measured by the deviation of the actual output from the hypothetical efficient output level. We construct an instrumental variable based on historical data to address potential endogeneity. The results highlight that the Internet improves capital and labour allocative efficiency and has heterogeneous effects in different industries. The effect is larger in low-technology industries. As a technology augmenting production factor, the Internet significantly improves the allocative efficiency of capital (labour) in the industries that use capital (labour) intensively. The mechanism analysis reveals that the Internet improves the allocative efficiency of firms by reducing their overhead expenses and raising the exit rate of inefficient firms from the market. This study extends the research on the effect of Internet and explores the causal relationship between the Internet and the allocative efficiency within industries, to highlight the importance of digital technology in economic growth, especially in the context of developing countries. [ABSTRACT FROM AUTHOR]

• The productivity paradox still persists in European regions. • Automation and digitalisation enhance the productivity of the adopting sectors. • Sectoral employment reallocation effects offset this positive impact on productivity growth. More than 30 years ago, Robert Solow provided the first evidence of the paradoxical low return of technological progress to productivity. Today, in an era of radical technological changes, characterized by disruptive socio-economic transformations in businesses and society, the puzzle is far from being solved. This paper offers additional reflections on this issue. Stemming from the recognition that in European regions a productivity paradox still persists, this study systematically defines and empirically tests some of the sources that could explain the weak association between the adoption of new technologies and the growth of regional labour productivity. Our findings indicate that, in general, new technologies do have a positive impact on the productivity of the sectors of adoption. The propagation of this effect to the whole regional economy, however, is mitigated by sectoral employment reallocation effects towards less productive sectors. [ABSTRACT FROM AUTHOR]

• Changes in productivity of small and large firms of automotive industry are analyzed. • The 2008-09 crisis impacted on productivity by reducing technological progress. • The consequences of the crisis were more severe for SMEs. • Suitable policies may be based on environmental regulation, incentive schemes and support to R&D investments. This paper analyzes the changes in productivity of small and large firms operating in the automotive industry in France, Italy and Spain, occurred during the pre-crisis (2001-2008) and post-crisis (2009-2014) periods. To this aim, the Malmquist index as a measure of total factor productivity (TFP) variation is computed, by using the non-parametric technique DEA, integrated by a bootstrap technique proposed by Simar and Wilson (1999). The analysis allows distinguishing among different possible sources of TFP changes, i.e. pure technical efficiency change, scale efficiency change and technological change. The latter comes up to be the main channel through which the global crisis negatively impacted on productivity, presumably by hampering the primary engines of technological change, i.e. research, innovation and investment through reduced availability of financial resources for SMEs, worsened perspectives for firm growth and greater concentration in selected geographical areas of investments by parent companies. [ABSTRACT FROM AUTHOR]

• Behavioral asymmetry between workers and rentiers impacts the decisions of the agents in relation to consumption, savings and capital stock. • A micro-based aggregate version of Kalecki's aphorism was obtained. • Income distribution does not change significantly even though workers leave a bequest. • Confirmation of the results obtained by Baranzini in a two-class life-cycle model in continuous time. • Growth and income distribution; bequest effect on the capital accumulation; Kalecki's aphorism. This article shows how the behavioral asymmetry between workers and rentiers, whether in relation to the possibility of inheriting (or not) assets, or in relation to the magnitude of the inherited assets, impacts the decisions of the agents in relation to consumption, savings and capital stock. An alternative approach to the Baranzini (1991) model is presented for the continuous case, allowing technical progress and introducing behavioral differences between rentiers and workers, not only from the point of view of their initial endowments but also from their preferences. The technical-conceptual framework of the present approach extends Baranzini's original model by emphasizing how agents incorporate the assets into their constraints. A micro-based version of Kalecki's famous aphorism is also obtained. [ABSTRACT FROM AUTHOR]

• A Schumpeterian growth model with distance to frontier is developed. • Financial intermediaries save information costs through delegation yet incur agency costs. • Investors thus face a tradeoff between the information and agency cost. • Saving the information costs dominates in the early stages of development. • Economic development is accompanied by a gradual switching from financial intermediaries to markets. This paper studies endogenous change of financial institutions in a Schumpeterian endogenous growth model with uncertain innovation outcome. Technological progress can result from either imitation or innovation. Information about each innovative project can be acquired by paying a fixed cost. Financial intermediaries save the information cost through delegation yet incur an agency cost that results from diversity of opinion. Investors thus face a tradeoff between the information and agency cost. Because the information and agency cost is proportional to the technological frontier and the local technology level respectively, saving the information cost dominates in the early stages of development when the distance to frontier is large. In contrast, avoiding the agency cost dominates as the local technology level approaches the frontier. As a result, economic development is accompanied by a gradual switching of financial structure from intermediaries to markets. [ABSTRACT FROM AUTHOR]

• How tax incentives for green development affect enterprise TFP is explored. • A 1% increase in tax incentives for mining companies increases TFP by 0.060%. • Porter hypothesis is confirmed at the firm level in China. • There is a two-way causal relationship between tax incentives and TFP. Based on unique micro-level data on 18,885 Chinese mining companies, this study explores the effect of tax incentives for green development on mining company total factor productivity (TFP) and its mechanism of influence. The results are as follows. (1) Tax incentives for green development can improve mining companies' TFP. A 1% increase in tax incentives for mining companies increases TFP by 0.060%. After considering endogeneity and selection bias, our conclusion is still valid. (2) Heterogeneity analysis shows that the positive effect of tax incentives on TFP is more significant for private companies, companies in central and western China and companies in areas with weak environmental controls. (3) There is a two-way causal relationship between tax incentives and TFP, mining companies with higher TFP receive more tax incentives. Further analysis shows that tax incentives improve TFP through technological progress. This study provides Chinese firm-level evidence for the Porter hypothesis. [ABSTRACT FROM AUTHOR]

• Long-run growth depends upon the evolution of institutions • Fixed institutions do not cause growth in the long-run • Fixed institutions can only cause growth in the short-run • Institutions that inhibit growth are institutions that are not capable of evolution I expound a model of technological progress, institutional development and growth in the aggregate. I show the model implies that long-run growth depends upon the evolution of institutions; that fixed institutions do not cause growth in the long-run; that fixed institutions can only cause growth in the short-run; and that institutions that inhibit growth are institutions that are not capable of evolution. [ABSTRACT FROM AUTHOR]

• This paper studies structural change in export diversification patterns. • We use a Ricardian-based model of countries' relative export variety (REV). • REV is an outcome of changes in relative productivity and relative country size. • Model predictions are confirmed in a sample of 132 countries (1988–2014). • Productivity differences drive diversification at the beginning of development. This paper analyses the effects of productivity and country size on the extent of trade structure diversification. Using a testable version of the Ricardian model, we show that relative export variety is an outcome of two forces: a relative productivity change (technological progress) and a relative country size change (labour force growth). The model predictions are validated empirically using product-level trade data for a sample of 132 countries (1988–2014), including 53 low-income countries. We find a robust positive relationship between export variety and the countries' relative productivity, as well as a negative relationship between export variety and the expansion of foreign economies (i.e., the growth of the RoW). The effect of technology differences on export variety is driving diversification especially at the beginning of the development process. The results are robust to changes in the measurement of export variety (also in terms of economic complexity), in the set of control variables, or in the estimation methods. [ABSTRACT FROM AUTHOR]

• We study real GDP per capita convergence among the CEE-8 and their catch-up towards the old EU-15 member states during the period 1995–2017. • We use an innovative analytical framework of convergence testing proposed by Phillips and Sul that accounts for heterogeneity in technological progress across countries. • Our empirical results indicate that in the EU-15 no distinct convergent patterns exist. • There is convergence among the CEE-8 countries. • The hypothesis of the CEE-8 convergence towards the old EU-15 is rejected • The CEE-8 are converging towards two largest EU countries: Germany and France. The enlargement of the European Union in 2004 to include Central and Eastern European countries has revived the convergence debate. This study concentrates on the empirical investigation of real GDP per capita convergence between the CEE-8 and their catch-up towards the old EU-15 member states. The empirical study is based on the innovative analytical framework of convergence testing proposed by Phillips and Sul that accounts for heterogeneity in technological progress across countries. Our empirical results indicate that in the EU-15 no distinct convergent patterns exist. However, there is convergence among the CEE-8 countries. Moreover, the hypothesis of the CEE-8 convergence towards the old EU-15 is rejected. Nevertheless, the CEE-8 seem to be converging towards two largest EU countries: Germany and France. [ABSTRACT FROM AUTHOR]

• Multi-dimensional industrial structural changes induce directed technical progress. • Energy and environment efficiency induced by three-dimensional structural change. • Industrial structural rationalization can induce backstop technological progress. • Structural rationalization works well on all technical progress in eastern China. • Structural upgrading drives fossil energy and environment saving in Midwest China. This study probes the influence of industrial structural rationalization, upgrading, and ecologicalization on energy- and environment- directed technological progress by constructing a spatial auto-regression model using panel data of 30 Chinese provinces from 2000-2016. The empirical results show that directed technological progress differs based on multi-dimensional industrial structural changes. Specifically, at the national level, industrial structural rationalization can promote all kinds of directed technological progress. Industrial structural upgrading and ecologicalization promote fossil fuel efficiency and environmental efficiency. The effects of industrial structural change exhibit regional heterogeneity: in eastern China, industrial structural rationalization promotes all kinds of technological progress, and pollution abatement technology can be stimulated by all kinds of structural changes; in central China and western China, industrial structural upgrading can accelerate energy-saving and pollution abatement technological progress, while structural ecologicalization only promotes fossil energy efficiency. Meanwhile, industrial policies drive multi-dimensional industrial structural change and, thus, induce directed technological progress. [ABSTRACT FROM AUTHOR]

• There is spatial correlation of electricity consumption of China. • Analyze impact of technology and industrial structure on electricity consumption. • Industrial structure contributes more to reduce electricity consumption. • Region heterogeneity is obvious among different regions and grid service zones. The increase of electricity consumption not only leads to economic growth, but also pollutes environment due to the heavy dependence on fossil fuels. How to reduce the electricity consumption without affecting the economic development is a challenging and pivotal issue. Relevant empirical evidence is scarce, so this paper deepens the understanding of two paths to decrease electricity consumption: technological progress and upgrading of industrial structure based on spatial and heterogeneity analyses. By constructing two spatial panel models, results show that electricity consumption among provinces in China is positively spatial-related and has certain path-dependent characteristics. To promote the technological progress and optimize the industrial structure are two effective solutions to reduce electricity consumption, and the latter channel plays a more important role. Heterogeneity among different regions and grid service zones exists obviously. [ABSTRACT FROM AUTHOR]

This article seeks to reassess the empirical literature on real exchange rate misalignment and growth in light of the extensive discussion about the relationship between income distribution and growth in developing economies. We state that the dynamic relationship between changes in the real exchange rate and output growth can be characterized by two conflicting partial effects, as follows: i) undervaluation promotes growth-enhancing changes in the productive structure of the economy by stimulating technological progress and knowledge spillovers, thus affecting positively output growth; ii) undervaluation raises income inequality and hence harms output growth. Though there are a vast number of empirical studies presenting robust evidence of a positive relationship between currency undervaluation and growth for developing economies, none has yet explicitly considered the potentially negative distributional effects of undervaluation on growth. Our empirical model adds to this literature by suggesting that, once both functional income distribution and the level of technological capabilities as relevant features of the structure of the economy are explicitly taken into account, the direct impact of real exchange rate misalignment on growth becomes statistically non-significant for a representative sample of developing countries. Further, based on our results, we state that the real exchange rate only affects growth indirectly through its impacts on functional income distribution and technological innovation. Our estimates have shown that the indirect impact of undervaluation on growth in developing countries is negatively signed. The results are robust to accounting for reverse causality through GMM-system analysis, using lagged observations in difference and level of endogenous variables as instruments. [ABSTRACT FROM AUTHOR]

• If social influences are forceful, they are usually based on economic pressure. • Resource based technical progress coerces firms and households to grow. • States' growth policies are substantially driven by technological unemployment. • The meritocratic principle is a key for understanding restrictions on policy making. • Limiting resource use and redistributing rents can stabilize markets without growth. Economic growth remains a prominent political goal, despite its conflicts with ecological sustainability. Are growth policies only a question of political or individual will, or do 'growth imperatives' make them inescapable? We structure the debate along two dimensions: (a) degree of coerciveness between free will and coercion, and (b) agents affected. With carefully derived micro level definitions of 'social coercion' and 'growth imperative', we discuss several mechanisms suspected to make growth necessary for firms, households, and nation states. We identify technological innovations as a systematic necessity to net invest, trapping firms and households in a positive feedback loop to increase efficiency. Resource-intensive technology is economically attractive because of a subtle violation of the meritocratic principle of justice. The resulting dilemma between 'technological unemployment' and the social necessity of high employment explains why states 'must' foster economic growth. Politically, we suggest to institutionally limit resource consumption and redistribute economic rents. [ABSTRACT FROM AUTHOR]

• We propose a two-sector growth model inspired by unified growth theory, which captures the crucial phenomena of structural change and changes in adult survival rate along the Industrial Revolution. • We estimate the individual contribution of technological progress, adult mortality, workforce, and the accumulation of fixed and human capital to the overall growth of Great Britain's economy during the period 1541–1914. • We find a U-shaped relationship between adult survival and income per worker. • We find a crucial and complex role of adult survival on the transition between regimes. • We find that the accumulation of fixed capital is the driving force behind the transition from a Malthusian to a pre-modern regime. This paper proposes a framework inspired by the Unified Growth Theory and by the literature on structural change to assess the contribution of technology, adult mortality, workforce, and physical and human capital accumulation to the transition from Malthusian stagnation to modern growth. A calibrated version of the model is capable of reproducing the dynamics of Great Britain's (i.e. England, Wales and Scotland) economy during the period 1541–1914, matching both the timing of transition and the pattern of the main macroeconomic and demographic variables. Technological progress emerges as the prime mover until 1850, while thereafter the reduction in adult mortality and factors accumulation play the major role. [ABSTRACT FROM AUTHOR]

• Distribution of much of the benefits from productivity gains across sectors through adjustment of relative prices causes value added per unit of output to fall in the progressive and rise in the relatively stagnant sectors. Under such circumstances, if total factor productivity is sought to be measured by taking value added as a proxy for output the result will inevitably be underestimate for the progressive and an overestimate for the relatively stagnant sectors. • Transformation of a low-growth inward looking economy into a substantially liberalized, globalized, high-growth economy had implications for the technical (intermediate input) structure of production as well as adjustment (erosion and buildup) of value added across sectors through changes in relative prices. The study observes that the relative price for the manufacturing sector (vis-a-vis the GDP deflator) declined steadily while that for the service subsector EHPAD (education, health, public administration and defence) increased fast, causing significant adjustment of sectoral value added. • The most interesting finding is the drag on the share of the manufacturing sector caused by adjustment of relative prices; this paring of sectoral share is an important explanation for the stagnation of relative share of manufacturing in GDP of India. • Admitting that the precise measures of sectoral gains or losses are inevitably subject to limitations of quality of data, the very consistent behaviour of the manufacturing and the EHPAD sectors over all the phases of our study lends strong support to the basic hypothesis of Baumol's disease for the Indian economy and throws light on the apparent stagnation of manufacturing's GVA share. [ABSTRACT FROM AUTHOR]

• Technical progress and variations in industry markups can change characteristics of the labor markets. • A numeric example illustrates the theory of the choice of technique. • In the example, switch points are created and destroyed with varying coefficients of production and varying markups. • Around some switch points, higher wages are associated with greater employment, given the level of net or gross output. • Graphical displays are provided for visualizing these results. This article presents an example in which perturbations in relative markups and technical progress result in variations in characteristics of the labor market. Around a switch point with a positive real Wicksell effect, a higher wage is associated with firms wanting to employ more labor per unit output of net product. Around a switch point with a reverse substitution of labor, firms in a particular industry want to hire more labor per unit output of gross product. Technical progress and variations in markups can bring about and take away circumstances favorable for workers wanting to press claims for higher wages. This article presents specific fluke switch points in which variations in technology and markups change these circumstances, as well as novel diagrams for visualizing the effects of such variations. [ABSTRACT FROM AUTHOR]

• Subsidy has a positive effect on investment, sales, technological progress and job creation. • Subsidized firms perform less well than non-subsidized ones concerning labour productivity and value creation. • Subsidized firms are less effective in achieving the planned goals regarding labour productivity and value creation. • Public support has only an effect on the size of investment and not on the decision to invest. The paper evaluates the effect of a Portuguese innovation subsidy (SI Innovation), launched in 2007–2013, on firm performance. Using counterfactual analysis methods and a sample composed of firms with approved applications and non-approved ones, the study shows that firms with the best proposals and with higher performance in the pre-intervention period are more likely to receive the subsidy. A positive and sustainable effect of the subsidy, within a time-window of 5 years, on fixed asset investment and technological progress are found. However, it seems that public support has only an effect on the size of investment and not on the decision to invest. Subsidized firms also perform less well than matched non-subsidized ones, and they are less effective in achieving the planned goals concerning labour productivity and value creation. [ABSTRACT FROM AUTHOR]

• This paper adopts the translog function to consider the elasticity of substitution among inputs. • The paper constructs a Kalman filter-based econometric model. • The paper studies the impact on energy intensity caused by input price changes and biased technological progress. • The sectors' energy intensity was subject to the combined impact of factor prices and biased technology progress. This paper uses the 1981–2012 input-output tables for adopting the translog cost function to construct a Kalman filter-based econometric model to estimate the share equation of energy, non-energy, capital and labor in the 33 China's sectors and to conduct empirical research on the impact on China's energy intensity caused by input price changes and biased technological progress. The findings are that between 1981 and 2012, the level of the sectors' energy intensity was subject to the combined impact of factor prices and biased technology progress. For some sectors, the average Allen-Uzawa elasticity of substitution (AES) for energy to capital or labor rental price was negative. For the 18 sectors, the biased technological progress was from energy savings, while one for the rest from energy consumption. In the 21 sectors, input price changes decreased the sectors' energy intensity, while 17 of them had the sectors' energy intensity decreased by technological progress. [ABSTRACT FROM AUTHOR]

• We observe a transition of a development phase based on agricultural and light-industrial activities towards a phase based on technology-intensive heavy-industrial and service activities. • Most of aggregate productivity growth during the period of analysis was due to technical progress rather than sectoral reallocation of labor. • Best performing subsystems were industry-based and were targeted for development through industrial policy programs. • The main source of total labor productivity growth was direct labor saving, although imported intermediate inputs also accounted for domestic labor saving. This paper provides an analysis of productivity growth and structural change of the Chinese economy for the period 1995–2009 based on the Subsystems approach. The approach allows a disaggregated analysis without losing sight of sectoral inter-dependences. We observe, in a clearer way, the transition in China from the development phase based on agriculture and 'light' industry to the phase based on 'heavy' industry and technology-intensive industry and services. We find that best performing subsystems where targeted by industrial policy for promotion. Although there is not a clear pattern, the main source of productivity growth across subsystems was direct labor savings. [ABSTRACT FROM AUTHOR]

This paper inquires about the structural breaks that investment generated by innovation waves imparts to an economic system. Its analysis is confined to investigate only the kind of investment which follows from innovations by leading firms as well as from a catching up process by imitating laggards. The innovation process is modeled as a self-organising process of information search set off by Poisson arrivals. Resulting investment waves determine structural changes in effective demand patterns causing macroeconomic disequilibria that prompt adjustments in capacity, demand and employment. Finally, it is argued that the wave-like nature of innovations and innovation driven investment is a structural cause of economic activity oscillations. [ABSTRACT FROM AUTHOR]

Abstract: A structural economic dynamic approach is distinguishable by its simultaneous considerations of supply and demand and their related effects wielded upon economic growth. However, properly considering cumulative causation requires a special framework for more fully accounting for technological progress, and not leaving it as simply exogenous. With this inquiry dimensions of Verdoorn''s Law are selectively embedded in Pasinetti''s multi-sector model, thus allowing us to better consider cumulative causation through rendering structural changes endogenous. In this setup, reconciliation between cumulative causation and balance of payments constrained views is shown to hold. [Copyright &y& Elsevier]

Abstract: The recent advances in the economics of innovation and the analysis of how composition effects influence the introduction of technological change in a global economy, characterized by the variety of production functions in use and different local factor markets, provide new strength to the induced innovation approach. Developing the localized technological change approach, it is argued that because there are irreversibilities, limited knowledge and local learning, the introduction of new technologies is induced by the disequilibrium conditions brought about in each system by all changes in relative factor prices. The direction of technological change in terms of its specific form of bias and how it is introduced and adopted, however, reflects the specific conditions of local factor markets. Well-defined long-term technological paths emerge in each region and they depend on the selection process in product markets. The more rigid and idiosyncratic, the endowment of production factors and the system of relative prices are, the more specific the technological path of each region is likely to be. The divide between the microeconomic and the macroeconomic models of induced technological change is reconciled. [Copyright &y& Elsevier]

In the standard representation of technology, productivity is built into the production function as a given relationship between inputs and output. This representation needs an equilibrium framework, in which the ratios between the factors and output are constant and corresponding to those dictated by the production function coefficients. In this framework, technological advances should be instantaneously mapped into increases in productivity, and the only way to explain the ‘productivity paradox’ is to assume adoption delays. We propose a different approach, by which productivity is the outcome of an out-of-equilibrium process triggered by a technological shock. The potential gains of a superior technology may only be appropriated if agents succeed in reshaping the productive capacity (whose distinguishing feature is to be temporally articulated), and in recovering the intertemporal coordination disrupted by the introduction of the new technique. Physical, human, and financial capital are complementary in this process of reshaping, and may constrain each other. The outcome of the disequilibrium process depends then on the interaction of accumulation choices, learning, and money supply rules. We argue that the different performances of the US and Europe in the last two decades may be explained along these lines. [Copyright &y& Elsevier]

In a recent article, Fagerberg [Struct. Change Econ. Dyn. 11 (2000) 393] finds changes in the employment share of the electrical machinery industry to positively impact the manufacturing sector productivity growth. Fagerberg''s approach has some methodological drawbacks, however. This note seeks to complement Fagerberg''s analysis by estimating the impact of the employment share of technologically progressive industries using a more adequate methodology. Fagerberg''s claim that the share of the ‘electronics’ industry positively affects manufacturing is confirmed. However, the size of the impact, and as a consequence the extent of spill-overs, is found to be much smaller than estimated by Fagerberg. [Copyright &y& Elsevier]