Abstract
The present paper focuses on the interdependence among technical changes in different stages of production in the textile industry. A model is developed to present the different linkages induced by price and quality effects of technical change and technological complementarities. The empirical analysis is based on data on the diffusion of three major innovations. One is the product innovation of synthetic fibres, the other two are process innovations in spinning (open-end rotors) and in weaving (shuttle-less looms), respectively. A model is estimated pooling information of 16 countries over 8 years, where the propensities to modernize are dependent variables.
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