Friday, August 10, 2007

Thesis Update:

This week my meeting with Dr Poon highlighted my work for the coming week. I will be attempting to cluster, using the e1071 package (or possibly the clValid package) in R, based upon the data from Dataset 5204.0 from the Australian Bureau of Statistics available at:

In particular, this clustering analysis will be performed upon the Compensation of Employees by current prices according to industry (Table 59), according to Dr Poons instructions, as this would provide preliminary results for part of this project.

. The results will be posted up next week.

Additionally, I have been requested to create folders for each component of work which I am currently undertaking in order to archive and manage sources better in case further work needs to be conducted on this topic. As such, I have created 7 folders, as defined by Dr Poon (one folder for introduction, one for literature review, one for methodology, one for data modeling, one for analysis, one for discussion, one for conclusions).

Additionally, review of papers by Muller, Bernard, and Frantzen (see below for references), have given me insight into why this study needs to be conducted. Drawing upon these papers, it can be seen that a more extensive analysis (especially from Mullers Paper) needs to be conducted in order to reach a further level of understanding in the convergence and divergence of industries, as Muller states that past studies have had contrary results, with some papers finding convergence amongst both manufacturing and service sectors of industries, and others finding no convergence at all (Muller, pp 6-7).

Furthermore, in relation to this, Frantzen argues that while overall in OECD
countries there is a clear trend of convergence, and confirmation of neo-classical models, the estimation of panel data upon a national level, when accounting for country-specific fixed effects, challenges the model, thus creating a level of uncertainty. It has also clearly be stated by Frantzen that “the empirical work on convergence through technological diffusion is still limited”, thus providing further incentive to carry out this study upon Australian data.

Likewise, Bernard’s article states that “the debate over convergence has lost its way…becoming mired in a debate about 2% per year convergence rates and their robustness or lack thereof” (Bernard, pp2). My study currently will aim to provide empirical data calculated based on statistics gathered by the Australian Bureau of Statistics to further give grounds for the argument of “robustness, or lack thereof” (Bernard, pp2).

Muller, G, 2000, A Glimpse on Sectoral Convergence of Productivity Levels, Halle Institute for Economic Research , Discussion Paper Nr 133

Bernard, A.B, Jones, C.I, 1996, Technology and Convergence, The Economic Journal, Vol 106. No 437.

Frantzen, D, 2004, Technological Diffusion and Productivity Convergence: A Study for Manufacturing in the OECD, Southern Economic Journal, 71(2), 352-376

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