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This paper studies the impact of input-trade liberalization on firms' decision to upgrade foreign technology embodied in imported capital goods. Our empirical analysis is motivated by a simple theoretical framework of endogenous technology adoption, heterogeneous firms and imported inputs. The model predicts a positive effect of input tariff reductions on firms' technology choice to source capital goods from abroad. This effect is heterogeneous across firms depending on their initial productivity level. Relying on India's trade liberalization episode in the early 1990s, we demonstrate that the probability of importing capital goods is higher for firms producing in industries that have experienced greater cuts on tariffs on intermediate goods. Only those firms in the middle range of the initial productivity distribution have benefited from input-trade liberalization to upgrade their technology.

Purpose - The current state of the art on continuous improvement takes into consideration that capabilities and organizational behaviors are more important elements for conduction and sustainability than the technical aspects. This set of capabilities and behaviors, initially addressed by Bessant and Caffyn in the 1990s, essentially considers that organizations should build an environment focussed on continuous learning. Thus, the purpose of this paper is to analyze the development of capabilities that support continuous improvement programs in two distinct productive environments: the automotive sector and the custom made capital goods sector. Design/methodology/approach - From a theoretical reference on the subject, a set of capabilities that are related to the practice of continuous improvement is raised and, through a qualitative approach, four companies of the two sectors considered are analyzed using a case study strategy. Findings - The research results suggest that the companies researched in the automotive sector have a higher level of employee engagement in relation to continuous improvement programs compared to the companies in the capital goods sector, which is justified by the strategy adopted by the organizations. Research limitations/implications - As any qualitative approach, this research presents restrictions regarding the generalization of the results for the studied sectors. Originality/value - The contribution of this paper can be divided into two parts. The first one refers to the identification of a current framework of capabilities that support continuous improvement, and the second one is the evaluation of the development of these capabilities in two sectors with different productive contexts (automotive and custom made capital goods).

According to the skill-biased technological change theory, the technological intensity of the imported input used in manufacturing may affect labor demand. This study examines the impact of imported inputs with different technological intensities on the absolute and relative demand for skilled labor in Türkiye’s manufacturing sector. Furthermore, the study focuses on only high and medium-high technological industries. The autoregressive distributed lag method was applied to monthly data from 2009:01 to 2020:11 to identify the long- and short-term effects. The study unveiled the presence of a long-term relationship between imported inputs and the demand for skilled labor. When raw material imports increased, the long-term absolute demand for skilled labor was found to be diminished. However, capital goods imports increased the short-term relative demand for skilled labor. Finally, total imports (i.e., the combination of raw material and capital goods) positively influenced the relative demand for skilled labor in the short term. However, in the long term, skilled labor demand was negatively correlated with total imports.

Despite the importance of informal modes of learning and innovation for developing countries, there is little empirical evidence on their role in firm performance. This paper examines the effect of formal and informal learning modes followed by small and large firms on their overall performance in the capital goods industry. Following the wider literature on national innovation systems, we categorise the innovation modes as formal Science, Technology and Innovation (STI) and informal learning by Doing, Using and Interacting (DUI) mode. We observe that in the case of small firms the informal learning and experience-based innovation is related to improved performance, while the formal STI mode does not have any effect. On the other hand, for large firms, both STI and DUI innovation modes are positively related to their sales growth. Our results indicate that building certain DUI capabilities may act as a pre-condition to enhance the strength of science and technology-based innovation strategies.

In an empirical, dynamic simultaneous equation model (DSEM) for Brazil with 22 equations and variables, we show that foreign income is a driver of economic growth besides semi-endogenous technical change. With a balance-of-payments constraint and endogenous terms of trade, the major mechanism is (i) world GDP driving exports, (ii) exports paying for imported capital goods, which (iii) enter a production function increasing output and the foreign-debt/GDP ratio and (iv) increase the endogenous labour force, and (v) slightly reduce human capital growth. The savings gap drives foreign debt and interest rates up and make the model unstable. Permanent increases of human capital increase the R&D/GDP ratio, labour-augmenting productivity, and GDP. A policy to increase the R&D/GDP ratio leads to more human capital, labour productivity and GDP levels. Both knowledge policies reduce the debt/GDP ratio. A lasting shock on the terms of trade reveals that there is no Harberger–Laursen–Metzler effect. The results hold in the presence of endogenous terms of trade, foreign debt, net foreign income, and net current transfers from abroad, and non-Walrasian (dis-)equilibrium variables: inflation and changing inventories for the goods market, and unemployment in the labour market. Policy should strengthen the weak link from R&D (research and development) to technical change and make education more attractive.

This article traces the historical usages of the term capital and the explosion of different types of supposed 'capital' in the twentieth century, including 'human capital' and 'social capital'. In medieval and early modern times, capital meant money investable or invested in business. This meaning persists in business circles today. In contrast, Adam Smith treated physical assets, machines and people as 'capital' and this different usage has dominated economics since. The pre-Smithian meaning referred to money or other saleable assets that could be used as collateral. This article questions the change in meaning by economists and sociologists and highlights the importance of collateralisable property for capitalism. 'Human capital' can only be collateral if the humans involved are slaves. 'Social capital' can never be used as collateral and it is not even owned. These important issues are masked by the broadened notion of'capital'. Given the conceptual problems involved, economists and sociologists should consider returning to the pre-Smithian and surviving business usage of the term.

We exploit a policy-induced exogenous surge in China's college-educated workforce that started in 2003 to identify the impact of human capital on productivity. Using a difference-in-differences estimation strategy, we find that industries using more human-capital intensive technologies experienced a larger gain in total factor productivity after 2003 than they did in prior years. Exploring the pathways from human capital increases to TFP growth, we find that these industries also accelerated new technology adoption, as reflected in the importation of advanced capital goods, R&D expenditure and capital intensity, as well as employment of more highly skilled individuals. The productivity gains were weaker for domestic private firms than for foreign-owned firms.

We conduct a randomized experiment that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 16–26% higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after controlling for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs and same capital equipment, treatment firms produce higher quality rugs despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.

This paper relaxes two assumptions on the traditional augmented Solow model: strict concavity of production functions and dual capital goods. It generalizes traditional conclusions of the Solow model by demonstrating that neoclassical properties of a production function are sufficient for the existence and global stability of the steady state in the augmented Solow model with multiple capital goods. Moreover, we prove necessity of essentiality of inputs for a neoclassical production function and generalize the golden rule of capital accumulation.

We show that shared and improved auditing standards, as induced by the audit oversight arising from the Public Company Accounting Oversight Board (PCAOB)’s inspections on non-U.S. auditors, help global exporting firms upgrade themselves and tap into global value chains (GVCs). Using a dataset of U.S. waterway imports from global suppliers of 36 countries, we find that PCAOB international inspections not only lead to significantly more exports to U.S. buyers, particularly for intermediate and capital goods, but exporters also upgrade their product complexity. These results are consistent with enhanced information quality of exporters and thus reduced informational frictions with downstream importers. Echoing this notion, we find stronger GVC effects of PCAOB inspections for exporters facing more informational problems, i.e., for those with ex-ante lower reporting quality or smaller market shares, and those located in countries with weaker institutions or higher geopolitical risk with the U.S. PCAOB inspections also increase the duration length of the chain relationship and supplier firms’ relationship-specific investments in the chain. We further find that U.S. importers with a greater share of suppliers audited by PCAOB-inspected auditors exhibit boosted financial outcomes. Overall, our findings suggest that audit oversight facilitates the formation, upgrading, and performance along GVCs.