Date of Award
Doctor of Philosophy (PhD)
The first chapter of this dissertation studies the role of human capital in generating economic convergence through its impact on manufacturing productivity growth and allocation of labor across sectors of the economy. I confirm and extend existing results showing that productivity in manufacturing – unlike its economy-wide counterpart – has exhibited convergence; that is, countries further behind the technology frontier tend to catch up to those on the frontier. I then show that the convergence in manufacturing is (a) somewhat accelerated by countries’ tertiary education levels and (b) faster in high-tech industries. Perhaps surprisingly, this is not driven by tertiary education’s direct impact on the rate of catching up in any of the high-tech industries. Instead, tertiary education has a composition effect: it increases the share of labor allocated to the fast-converging high-tech sector. Since low-income countries usually have low shares of college-educated workers, these findings help explain “premature deindustrialization” in those countries, a process where, despite the potential of manufacturing to generate economic convergence, it is the sectors with fewer growth prospects (e.g, services) that are expanding. It also helps explain why previous studies tended to find negligible effects of tertiary education on growth. The second chapter of this dissertation investigates the link between these labor inflows and foreign direct investment (FDI). Using a decomposition for labor productivity change with sectoral level data for Latin American and Asia countries between the years 1970 and 2011, I find that FDI has an important role in explaining this misallocation of workers across sectors. Furthermore, results indicate that this misallocation is driven mainly by a growth in the service sector.
Vaca Pereira Rocha, Hugo, "Essays on Manufacturing and Growth" (2023). All Dissertations. 3344.