Research and Development/Tech Change/Emerging Technologies,

Buongiorno, Joseph

Oliveira, Ronald A.

English

Research Papers in Economics

International Diffusion  of
Technological  Change  Within the Wood
Products  Industry: The  Case  of  Particleboard
Joseph  Buongiorno and Ronald A.  Oliveira
During  the  past  twenty-five  years  the  world
production of woodbased panels has grown  rapidly
at  an  average  rate  of  ten  percent  per year  [FAO
1975].  Moreover,  within  the  group  of structural
wood-based  panels, defined as the sum of plywood,
particleboard and compressed fibreboard,'  particle-
board  production  has  grown  twice  as  fast  during
the  same  period. The  world  share of particleboard
has  in effect  grown  from  a negligible level in  1950
to about 38  percent in  1973.  This pattern  of sub-
stitution  has  not  been  the  same,  however,  in  all
countries.  The  displacement  of plywood and fibre-
board  production  by  particleboard  has  been  most
rapid  in Europe,  the  USSR and Oceania,  moderate
in  North  America  and  very  small  in Japan,  where
plywood  production  has  taken  the  largest  share
of structural  wood-based  panels  output.  By look-
ing  at  the  data  for  individual  countries  one  can
observe  even  more  striking  differences  with
respect  to  the  starting  date  of  the  diffusion  of
particleboard  production,  the  velocity  at  which
diffusion  took  place,  and  the  ultimate  limit  of
its  share.  The  objectives  of  this  paper  are  to
report  on  the  modeling  of  the  particleboard
production  diffusion  process  for  separate  coun-
tries  and  to  examine  the  differences  in  these
models across countries.
Joseph  Buongiorno  is an  assistant professor,  Department
of Forestry,  University  of Wisconsin,  Madison. Ronald  A.
Oliveira  is  an assistant  professor,  Department  of Agricul-
tural  and  Resource  Economics,  Oregon State  University,
Corvallis.
This research  paper was  developed  from  research  sup-
ported  by  the  School  of Natural  Resources,  College  of
Agricultural  and  Life  Sciences,  and  by  the  Graduate
School, University of Wisconsin,  Madison.
Precise  definitions  of these products  can be found in
FAO  [1976,  p. xv].
2Such plots  are given  in  an earlier  manuscript  [Buon-
giorno and Oliveira].
Model of Diffusion  Within Countries
As  pointed  out  above,  the  measure  of the  dif-
fusion  of  particleboard  used  in  this study  is  the
share  of particleboard within structural wood-based
panels;  i.e., Sit = Rit/ (Rit + Fit + Lit), where Sit is.
the  share  of particleboard  production  in country i
in  year  t,  Rit  is  the  production  of particleboard,
Fit  is  the  production  of compressed  fibreboard,
and  Lit is  the  production  of plywood. By plotting
the  value  of  Sit  for  a  few  countries,  one  can
observe  that  all  of  the  time  series follow  the  sig-
moid shape  typical  of many  growth curves, with a
slow  start  followed by  an  acceleration  of the  rate
of substitution  and finally  a decrease of this rate.2
Other  studies have observed  this pattern in the dif-
fusion  of new  processes within  industries and have
usually  modeled  it  with  some  form  of  a  con-
tinuous  function  [Griliches,  Mansfield,  Swan].  In
the  present  study  the  logistic  model was  selected
for its relatively simple interpretation.
Employing  the  definition  of  Sit,  the  logistic
diffusion  process can be formulated as follows:
Sit= Ki/(1  + exp (-ai - bit)),  (1)
i= 1,2,...,N,
where  Ki,  ai,  and  bi  are  constant  parameters
specific  to country i, N is the number of countries,
and t is time in years. To simplify notation the sub-
script i is omitted in the remainder  of the paper.
Employing  annual  time  series  data  from  the
period  1955-73  the  parameters  K, a,  and  b in  (1)
were  estimated  simultaneously  via  nonlinear
least  squares  for twenty-five  countries.  The results
are  shown  in  table  1.  As  can  be  seen  from  the
standard errors of the  estimates, the logistic curves,
in  general,  fit  well  the  growth  of particleboard
production  within each country.  In general the 95
percent  confidence  intervals  define  the  values  of
K,  a,  and  b  reasonably  well  even  though  these
confidence  intervals  are  only  approximate  since
166International  Diffusion of Change
Table  1. Characteristics of the  diffusion of particleboard
Standard  Starting  Velocity of
Logistic Model  Parameters  Error of  Date  Diffusion
Country  K  a  b  Estimates  to + 1950  DT  (years)
Austria  .909  -2.806  .261  .002  1952  16.9
(.02)  (.15)  (.02)  (.4)  (1.3)
Bulgaria  .642  -5.918  .631  .005  1956  7.0
(.02)  (1.65)  (.16)  (1.2)  (1.8)
Czechoslovakia  .580  -5.368  .423  .002  1957  10.4
(.01)  (.35)  (.03)  (.3)  (.7)
Denmark  .967  -1.089  .181  .003  1944  24.3
(.05)  (.33)  (.05)  (3.5)  (6.7)
Finland  1.00  -3.601  .147  .003  1955  30.0
(.75)  (.5)  (.04)  (5.5)  (8.1)
France  .643  -2.672  .266  .003  1952  16.5
(.02)  (.2)  (.02)  (.6)  (1.2)
Germany  (D.R.)  .885  - .574  .145  .003  1939  30.3
(.05)  (.16)  (.01)  (1.8)  (2.1)
Germany  (F.R.)  .938  -1.773  .183  .003  1948  24.0
(.04)  (.11)  (.02)  (.8)  (2.6)
Greece  .579  -7.106  .442  .004  1961  10.0
(.05)  (1.7)  (.12)  (1.0)  (2.7)
Hungary  .744  -3.654  .272  .005  1955  16.2
(.06)  (.5)  (.05)  (1.0)  (3.0)
Ireland  .787  -5.738  .468  .007  1958  9.4
(.04)  (1.3)  (.11)  (1.0)  (2.2)
Italy  .715  -4.223  .333  .005  1956  13.2
(.04)  (.5)  (.05)  (.7)  (2.0)
Netherlands  '490  -5.517  .954  .004  1953  4.6
(.01)  (1.3)  (.21)  (.6)  (1.0)
Norway  .639  -4.631  .424  .004  1956  10.4
(.02)  (.6)  (.06)  (.6)  (1.5)
Poland  .461  -6.688  .603  .002  1957  7.3
(.01)  (2.05)  (.16)  (1.4)  (1.9)
Spain  .647  -6.989  .492  .004  1960  8.9
(.03)  (.85)  (.06)  (.6)  (1.1)
Sweden  .915  -4.187  .190  .002  1960  23.2
(.28)  (.2)  (.03)  (1.7)  (3.7)
Switzerland  .928  - .571  .152  .002  1939  28.9
(.03)  (.11)  (.02)  (2.0)  (3.8)
United  Kingdom  .938  -1.960  .213  .005  1949  26.7
(.05)  (.24)  (.03)  (1.3)  (2.9)
Yugoslavia  .491  -11.497  .938  .003  1960  4.7
(.01)  (1.7)  (.14)  (.4)  (.7)
Australia  .557  -7.568  .495  .002  1962  10.3
(.01)  (.6)  (.04)  (.4)  (.7)
New Zealand  .553  -7.568  .495  .002  1962  10.3
(.03)  (.6)  (.04)  (.3)  (1.0)
U.S.SR.  .497  -5.130  .360  .001  1958  12.2
(.01)  (.3)  (.03)  (.2)  (1.0)
Canada  1.0  -4.597  .134  .001  1968  32.8
(1.4)  (1.2)  (.02)  (11.5)  (4.9)
U.S.A.  1.0  -4.08  .127  .001  1965  34.6
(.9)  (.7)  (.03)  (8.8)  (4.0)
Note:  Numbers in parenthesis are standard errors.
167
Buongiorno and OliveiraWestern J. Agr. Econ.
they  are  calculated  on  the  assumption  that  the
model  is  linear  with  respect  to  the  parameters
around  the  calculated  values.  Parameters  a  and b
are  less  accurately  defined  relative  to  K  most
likely  due  to  the  high  correlation  between  the
former two parameters.
Limit of the Diffusion Process
The  estimation  of  the  logistic  diffusion  curves
reveals  an  interesting  result.  For  most  of  the
countries  the  limit  of  the  diffusion  process  K  is
less  than  one,  which  shows  that  the  substitution
of  particleboard  has  gone  far  enough  in  most
countries  to  reveal  a  definitive  saturation  level.
The  exceptions  are  Finland,  Canada  and  the
United  States.  For  the latter  three  countries  the
parameter  estimates  for  a  and  b  in  table  1 were
obtained  under  the  constraint  of  K  being  equal
to  one.  Similar  to  the  above  three  countries,
the  saturation  level  for  Sweden  cannot  be  well
defined  from  the  national  data  alone.  Thus,
although  its  nonlinear least  squares  estimate  of K
(.915)  is less  than  one,  the  95  percent  confidence
interval for this estimate is very large.
A  striking  fact  is  that  by  1973  most  of  the
countries  (except  for  the  four  listed above)  seem
very  close  to having reached  their  saturation  level
in terms  of the  possible  diffusion  of particleboard
within  the  group  of wood-based  panels.  Given the
accuracy  of  the  point  estimates  of  the long-term
shares,  depicted  by  the  95  percent  confidence
interval,  it  is  not  possible  to  reject  the  null
hypothesis  that  the  equilibrium  share  of particle-
board  was  already  reached  in  1973  for 20  of the
22  countries  analyzed.  Furthermore,  there  is  a
wide  and  statistically  significant  variation  in  the
expected  long-term  share  of  particleboard  from
country to country.
Regarding  Canada,  Finland,  Sweden  and  the
United  States  an  attempt  has  been  made  to esti-
mate  the  long-term  share  of  particleboard  by
pooling  the  information  from  these  countries  and
from  the  other countries in the sample.  Using only
data  from  this latter  set of countries  the following
logit relationship  was observed:
K log  ~-K  =  .61  D10-  .68 W- .38,  (2)
(.10)  (.26)
R2 =.73, Standard Error = .57,
where  K is the expected long-term  share calculated
from  the  logistic  diffusion  curves,  D10 is the time
span  (in  years)  it  took  for  the  share  of  particle-
board  production  to  grow  from  10%  to  20%o  of
total  wood-based  panels  production,  and W is  a
dummy  variable  equal  to  1 for eastern  European
countries,  including  Yugoslavia  and  the  USSR,
and to  o for market economies. From (2) it appears
that  the  early  pattern  of growth  of  the  share  of
particleboard  is  a  significant  indicator  of  the
ultimate  share  of  particleboard  within  wood-
based  panels  production.  Countries  with  the
slower  initial  growth  are  the  ones  which seem  to
achieve  the  higher long-term  shares.  Furthermore,
eastern  European  countries  generally  achieve  an
ultimate  share  which  is  below  the  share  achieved
by  market  economies,  everything  else  constant.
The  first explanation  which  comes to mind is that
there  may  be  in  those  countries  a  systematic
policy  to  limit  the  development  of particleboard.
However in  1973 the German Democratic Republic
had  a particleboard  share  equal  to  85%  and  it is
still  expected  to grow  towards  90%,  although  the
95%  confidence  interval  on that  estimate is  quite
large. 3
Geographical  Diffusion of the
Particleboard  Technology
The  first industrial  production  of particleboard
using  synthetic  resins  is  believed  to  have  been
operated in  Bremen, in what is now the Democratic
Republic  of Germany,  in  1941  [Moslemi,  Akers].
The formidable expansion of particleboard industry
in  Europe  began  in  the  late  1940's,  and  most
patents  were  emitted  from Germany  and  Switzer-
land.  Considerable  effort  would  be  needed  to
accurately  pin  point  the  year  when  the  first
particleboard plant started to operate commercially
in  each  country.  It is possible, however,  to use the
logistic  curves  calculated  above  to  provide  an
estimate of the time when the  diffusion of particle-
board initiated, after defining somewhat  arbitrarily
an origin of the logistic process. Following Griliches
and  Swan  the  starting  date  of  the  diffusion  of
3By  employing  relationship  (2)  long-term  shares  for
Canada,  Finland,  Sweden,  and  the  U.S.  were  estimated.
These  new  estimates of K were in turn used to re-estimate
the  parameters a and  b for these four countries. The results
are presented  in Buongiorno and Oliveira.
168
June 1977International  Diffusion of Change
particleboard  was  defined  as the  time to when the
share  of  particleboard  reached  10%  of the  long-
term  equilibrium  share  K.  Thus  by  substituting
into (1), it is found that to = (-2.2-a)  /b.
The  results  of the  calculations  in all  countries
show  the  Democratic  Republic  of  Germany
(1929),  Switzerland  (1939),  Denmark  (1944),
and  Federal  Republic  of Germany  (1948)  as  the
pioneering  countries  while  Australia  (1961), New
Zealand  (1962),  USA (1965),  and  Canada  (1968)
are  the  late  adopters.  As  an  indication  of the
accuracy  of  these  estimates  the  sample  standard
deviations  of to are  reported  in  table  1 and reveal
that  to  is  well  defined  for  most  countries,  the
notable exceptions  being the late adopters.
A  multiple  regression  analysis,  the  details  of
which  are  reported  in  Buongiorno  and  Oliveira,
supported  the  hypothesis  that  other  things being
equal  countries  rich  in  wood  supply have  tended
to  postpone  the  introduction  of  particleboard
production.  This  analysis  also  indicated  that
distance  from  the  source  of  particleboard  pro-
duction  (assumed  to be  the Democratic  Republic
of Germany)  seemed  to  have  a  positive  influence
on  the  delayment  of  adoption  (i.e.,  to). Further-
more, it was  found that the importance of distance
(with  respect  to  to)  decreased  for  countries
further  away from the innovation  source.
Velocity  of Diffusion  Within Countries
Mansfield  has shown that by defining Pt as St/K,
the  time DT necessary  for Pt  to grow from P1 to
P2 is defined as:
DT = (1/b) Log  [(l-P 1) P2/(1-P2)P1],
and  is  dependent  only  on  P1,  P2  and  b.  Setting
P1 =  .10  and  P2 =  .90 we then have  DT = 4.4/b.
This  quantity  which  we  adopt  as our  measure  of
the  diffusion  of  the  particleboard  technology  in
each  country  depends  only  on  the  coefficient
b  and  is  extremely  easy  to  interpret.  In  other
words,  it  is  the  time  necessary  for  the  share  of
particleboard  to  grow  from  10  percent  to  90
percent  of  its  long-term  equilibrium  share.  The
estimated  values  of DT  and  their  standard  devia-
tions  are  reported  in  table  1.  They  show  that
the  velocity  of  the  diffusion  of particleboard  is
accurately defined  in most countries.
It  was  found  through  cross-sectional  multiple
regression  analysis  [Buongiorno  and  Oliveira]
that  DT  was  positively  related  to availability  of
raw  material  or  wood  supply  and  negatively
related  to gross  domestic  product  growth  during
1960-1970.  These  results  indicate  that  although
countries  with  a  large  supply  of wood  tended  to
be  late  adopters  they  were  also  relatively  fast
adopters.  The  regression  analysis  also  indicated
that  the  starting  date  of  adoption,  to,  was  not
significantly  related to DT.
Conclusion
In  addition  to  demonstrating  the  successful
application  of  logistic  curves  to  the  study  of
international  particleboard  production  diffusion,
the  above  analysis  leads  to  the  following  con-
clusions:  (i)  there is wide variation in the expected
long-term  share  of  particleboard  production
across  countries;  (ii)  except  for  Canada,  Finland,
Sweden  and the U.S., most of the developed  coun-
tries  seemed  close  to  having  reached  their  long-
term  saturation  level  or  production  share  by
1973;  (iii)  countries  with slower  initial growth  in
particleboard  production  seem  to  be  the  ones to
achieve  the  higher  long-term  shares  with  respect
to  total  wood-based  panel  production;  (iv)  ceteris
paribus eastern  European  countries seem generally
to  achieve  an  ultimate  production  share  which is
10%  below  the  share  achieved  by  market
economies; (v)  distance from the source  of particle-
board  production  (taken  as  the  Decomratic
Republic  of  Germany)  and  the  availability  of
roundwood  are  positively  related  to  (i.e.,  delay)
the  time of adoption  of particleboard  production;
and  (vi)  ceteris paribus the  velocity  of the  dif-
fusion  of  particleboard  production  within  coun-
tries  seems to have  been higher in countries with a
high level  of economic  growth  and lower  in coun-
tries with high wood availability.
Useful  extensions  of the  analysis  would  be  the
application  of the empirical findings  to forecasting
particleboard  diffusion in developing countries  and,
perhaps,  determining  which  countries  would  be
most successful with particleboard production.
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169
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170
June 1977

A Study of Some Assumptions Underlying Innovation Diffusion Functions,&quot;

Agriculture Organization of the United Nations.

Diffusion of Particleboard Within the Wood Based Panels Industry, Across Countries and Over Time.&quot;

Hybrid Corn: An Exploration in

Particleboard and Hardboard.

Technical Change and the Rate of Imitation,&quot;

The International Diffusion of an Innovation,&quot;

INTERNATIONAL DIFFUSION OF TECHNOLOGICAL CHANGE WITHIN THE WOOD PRODUCTS INDUSTRY: THE CASE OF PARTICLEBOARD

INTERNATIONAL DIFFUSION OF TECHNOLOGICAL CHANGE WITHIN THE WOOD PRODUCTS INDUSTRY: THE CASE OF PARTICLEBOARD

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