UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

Tab 11: Results for the Restricted Estimations of the Augmented Gravity
Model
(1) (2) (3) (4) (5) (6)
1995 1996 1997 1995 1996 1997
Const. 3.676 3.830 3.892 3.407 3.562 3.665
(8.113) (8.404) (8.213) (7.463) (7.720) (7.644)
log(GDPi) 0.619 0.603 0.595 0.638 0.624 0.609
(8.127) (7.926) (7.412) (8.356) (8.102) (7.540)
log(GDPj) 0.481 0.447 0.439 0.500 0.467 0.452
(7.031) (6.433) (6.024) (7.215) (6.569) (6.150)
log(DISTij) -0.600 -0.602 -0.600 -0.622 -0.628 -0.625
(-7.089) (-7.098) (-6.810) (-7.347) (-7.307) (-7.110)
Language -0.040 -0.104 -0.110 0.000 -0.061 -0.073
(-0.260) (-0.679) (-0.728) (0.003) (-0.385) (-0.472)
EU 0.293 0.241 0.264 0.307 0.257 0.277
(2.716) (2.285) (2.259) (2.843) (2.426) (2.378)
log(TMij * TMji) 0.218 0.237 0.241
(5.413) (5.866) (5.758)
log(TMij + TMji) 0.408 0.442 0.456
(5.042) (5.377) (5.456)
Adj. R 2 0.908 0.905 0.893 0.906 0.902 0.891
1) t-statistics in brackets. White’s heteroskedasticity-consistent estimators of the variance matrix of
the regression coefficients are used to calculate t-statistics.
5. Some Long-Term Aspects
In the US productivity growth in the 1980s and 1990s has benefited from growing trade
– indeed mainly from rising import penetration as is shown in the empirical analysis of
MANN (1998); she also shows that Germany had no significant productivity-enhancing
effect from trade. This might reflect lack of flexibility of firms in Germany’s tradable
sector, but it also could indicate the different regional trade orientation of the US and
Germany over time. While the US has strongly increased imports from Asian NICs
which increasingly have realized high R&D-GDP ratios and thus can be expected to
export more technology-intensive products over time, Germany’s imports from Asia
have been rather modest.
A strange finding for Germany also concerns the fact that labor productivity in
the high technology sector was lower than average in the 1990s (WELFENS 2002;
GRIES/ JUNGMITTAG/WELFENS, 2001a). This might point both to weaknesses of
Germany’s high technology firms and to inefficient R&D subsidization. From this per-
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