erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Catch-Up Based Growth In a Developıng Country: A Case Study For Turkısh Manufacturıng Industrıes

Teoman Pamukçu (Free University of Brussels, Belgium)
Paul de Boer (Erasmus University, The Netherlands)

Abstract  

Differences in industrialisation experiences between developing countries in the second half of the 20^th century have induced economists to investigate the question whether being a late-industrializer has a positive effect on a country's growth momentum, and, in case of an affirmative answer, to identify the determinants of an economic growth process based on catching up with industrialised countries. The analytical framework used in our paper takes account of the effects of human capital, imports of capital goods, and of the openness to trade, on international technology diffusion. We consider human capital and imported capital goods to be factors that may accelerate international technology diffusion to developing nations and, consequently, should not enter the production function of a developing economy (or of its sectors) as "ordinary" factors of production (like the number of workers and the stock of capital). Openness to trade might, as well, have positive effects on the technology diffusion process. First, we model the impact of these three variables on the growth rate separately, and, secondly, in interaction with an indicator of the catch-up potential (which is measured by the ratio of the per capita income of the country at the world technology frontier to that of the developing country). We estimate the model for 15 Turkish manufacturing industries over the period 1963-1993. Information criteria are used for the selection of the variables to be retained in the regressions. Empirical results show that: (i) the proxy of the catch-up potential has been retained by the selection criteria for 10 out of 15 industries, and that its coefficient is negative, and significantly different from zero, for 9 industries. In other words, contrarily to conventional wisdom, during the period 1963-1993, the more technologically advanced industries in Turkey have been able to catch up with those in the US, but not those that lagged behind; (ii) this result is only partly modified when the interaction terms between the catch-up potential, and human capital, and imports of capital goods are included in the regressions; (iii) the openness to trade, which is measured by a dummy variable, is retained for one industry only, with a positive coefficient, which is significantly different from zero. Finally, we discuss the implications of these results for growth in developing countries.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
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e-mail: metuerc@metu.edu.tr