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Productivity differences in an interdependent world

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  • Fadinger, Harald

Abstract

This paper studies cross-country differences in productivity from an open economy perspective by using a Helpman-Krugman-Heckscher-Ohlin model that embraces the single-cone model and a one-sector economy with factor deepening as particular cases. To estimate the model, I combine tools from development accounting and the factor content of trade literature. When simultaneously fitting data on income, factor prices and the factor content of trade, I find that the one-sector model is by far better supported by the data than the single-cone model. Rich countries have far higher productivities of human capital than poor ones, while differences in physical capital productivity are not related to income per worker. Finally, I estimate an aggregate elasticity of substitution between human and physical capital that is significantly below one.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 84 (2011)
Issue (Month): 2 (July)
Pages: 221-232

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Handle: RePEc:eee:inecon:v:84:y:2011:i:2:p:221-232

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Heckscher-Ohlin Productivity differences Development accounting Open economy growth;

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References

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Citations

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Cited by:
  1. Gino Gancia & Andreas Müller and Fabrizio Zilibotti, 2010. "Structural Development Accounting," Working Papers 494, Barcelona Graduate School of Economics.
  2. Nishioka, Shuichiro, 2013. "R&D, trade in intermediate inputs, and the comparative advantage of advanced countries," Journal of the Japanese and International Economies, Elsevier, vol. 30(C), pages 96-110.
  3. Nishioka, Shuichiro, 2012. "International differences in production techniques: Implications for the factor content of trade," Journal of International Economics, Elsevier, vol. 87(1), pages 98-104.
  4. Jaume Ventura, 2012. "Comment on "How Do Laffer Curves Differ Across Countries?"," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 249-253 National Bureau of Economic Research, Inc.
  5. Marshall, Kathryn G., 2012. "International productivity and factor price comparisons," Journal of International Economics, Elsevier, vol. 87(2), pages 386-390.

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