Sectoral Energy- and Labour-Productivity Convergence



observed convergence patterns. Third, we will try to explain (persistent) differences in cross-
country productivity growth by examining the role of different country-specific variables in
driving energy- and labour-productivity growth at the sectoral level. The remaining part of
this section is devoted to a σ-convergence analysis for a breakdown of aggregate
Manufacturing into 10 sub-sectors. The other issues are the subjects of section 4.

In Figures 3a and 3b we present the standard deviation of the log of, respectively,
energy- and labour productivity for each of the 10 Manufacturing sub-sectors included in our
dataset.13 Figure 3a reveals that the pattern of divergence in cross-country energy-
productivity performance at the level of aggregate Manufacturing is to be found only in Iron
and Steel and Non-Ferrous Metals. On the contrary, Food, Machinery, Non-metallic Minerals
(until 1980) and Textiles all display evidence of (strong) σ-convergence. Cross-country
productivity differences remain more or less constant in Non-Metallic Minerals (after 1980),
Chemicals, Transport Equipment, Paper and Wood.

From Figure 3b it can be seen that the lack of labour-productivity convergence in
aggregate Manufacturing is the result of mixed convergence patterns in different
manufacturing sectors. Chemicals, Iron and Steel, Non-ferrous Metals and Wood exhibit
(strong) convergence, while Machinery shows the opposite pattern of divergence. The sectors
Food, Non-Metallic Minerals, Textile, Paper and Transport Equipment display no clear
evidence for either convergence or divergence, although the latter shows substantial
fluctuations over time. Moreover, it is to be noted that in Chemicals, Iron and Steel, Non-
Ferrous Metals and Non-Metallic Minerals convergence of labour-productivity performance
is particularly strong during the first half of the 1980s.

( Figure 3a and 3b, Pages 25 and 26)

In conclusion, we found cross-country variation of energy-productivity performance to be
substantially higher than of labour-productivity performance at all levels of sectoral
aggregation, and in particular in Services, Chemicals, Paper, Wood and at an ever increasing
rate also in Iron and Steel and Non-Ferrous Metals. In Machinery, however, cross-country
variation of energy- and labour-productivity differences has strongly converged, resulting in a

13 Due to limited data availability, the following countries are excluded from the calculation of cross-country
dispersion, shown in Figure 4. Food: Australia and Canada; Iron and steel: Japan; Machinery: Canada, Japan,
the Netherlands; Transport Equipment: Canada; Non-Ferrous Metals: Denmark; Paper: Australia, Japan;
Textile: Canada; Wood: Canada, France, Japan, United Kingdom, United States.



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