Competitiveness, Convergence, and International Specialization

Competitiveness, Convergence, and International Specialization

By David Dollar and Edward N. Wolff





David Dollar and Edward Wolff look at claims that a deindustrialized United States is on the road to secondrate status in the global marketplace and find them to be both unfounded and simplistic. Their systematic and empirical investigation of the mechanisms through which countries like Japan and Germany have caught up with the United States in terms of productivity and standard of living will inform public debate about which government policies are likely to improve a nation's competitiveness. Looking at productivity convergence from the industry and subindustry level, Dollar and Wolff also examine questions of the relationship of productivity growth in individual industries to convergence of overall productivity in developed countries, the identification of industries crucial for aggregate productivity growth, the sources of productivity growth within industries, the relationship between international trade and productivity convergence, and whether the same mechanics of convergence are at work in developing countries. The authors' findings reveal, among other things, that the slowness of U.S. productivity growth relative to other nations is largely due to forces pushing for convergence of aggregate productivity levels. Although other countries have been catching up with the U.S., there is no evidence that they will surpass the US. or that the U.S. has deindustrialized. Perhaps most important, Dollar and Wolff find that countries catch up by raising their productivity levels in all manufacturing industries, not by large shifts of their employment and output from low- to high-value-added sectors. The growing similarity of advanced economies in terms of overall productivity masks a continued high degree of specialization in particular industries. Today different countries are the productivity leaders in different industries. Accordingly, the authors recommend that public policy focus on institutions and policies to promote innovation in general, rather than in key industries, and on free trade rather than protectionism.


$48.00 X ISBN: 9780262041355 238 pp. | 6.2 in x 9.1 in


  • Dollar and Wolff have written an interesting and original piece of work that goes beyond earlier studies of competitiveness and productivity convergence. The book deserves to be read by all involved in industrial policy, to get their facts straight.

    Magnus Blomstrom

    Professor, Stockholm School of Economics, and Research Associate, National Bureau of Economics Research

  • The data and analysis in this book expand greatly our understanding of economic convergence since World War II, and of the factors that lie behind covergence. The book presents a wealth of new data on patterns of convergence at an industry level. The interpretations offered by the authors are provocative and important.

    Richard Nelson

    National Bureau of Economic Research

  • An illuminating contribution to the understanding of the productivity perfomance of advanced capitalist countries. A clear analysis of labor productivity and total factor productivity at a disaggregated level.

    Professor Angus Maddison

    University of Groningen