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Structural Development Accounting

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  • Gino Gancia
  • Andreas Müller and Fabrizio Zilibotti

Abstract

In this paper, we construct and estimate a unified model combining three of the main sources of cross-country income disparities: differences in factor endowments, barriers to technology adoption and the inappropriateness of frontier technologies to local conditions. The key components of our framework are di¤erent types of workers (skilled and unskilled labor), distortions to capital accumulation, directed technical change, costly adoption and spillovers from the world technology frontier. Despite its parsimonious parametrization, our empirical model provides a good fit of GDP data for up to 90 countries in 1970 and 2000. We use the model to assess the relative importance of alternative factors a¤ecting the world income distribution and to perform counterfactual experiments. Our results suggests that removing barriers to technology adoption would increase output of the average OECD economy relative to the US frontier from 68.3% to 92.5%. The average non-OECD country would instead increase from 17.4% to 53.8%. Slashing barriers would also lead to higher skill premia in all countries. We also study how globalization can shape income disparities. In the absence of global IPR protection, we find that trade in goods ampli…es income disparities, induces skill-biased technology adoption and increases skill premia in the majority of countries. These results are reverted if trade liberalization is coupled with international protection of IPR.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 494.

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Date of creation: Aug 2010
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Handle: RePEc:bge:wpaper:494

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Keywords: Directed Technology Adoption; Development Accounting; Distance to Frontier; Inappropriate Technologies; Skill-biased Technical Change; Productivity; TFP differences;

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References

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  1. Ventura, Jaume, 2005. "A Global View of Economic Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 22, pages 1419-1497 Elsevier.
  2. Francesco Caselli & Wilbur John Coleman II, 2000. "The World Technology Frontier," NBER Working Papers 7904, National Bureau of Economic Research, Inc.
  3. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
  4. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2002. "Distance to Frontier, Selection, and Economic Growth," NBER Working Papers 9066, National Bureau of Economic Research, Inc.
  5. Ciccone, Antonio & Papaioannou, Elias, 2006. "Human capital, the structure of production, and growth," Working Paper Series 0623, European Central Bank.
  6. Daron Acemoglu, 2003. "Patterns of Skill Premia," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 199-230.
  7. Diego Comin & Bart Hobijn, 2009. "Lobbies and Technology Diffusion," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 229-244, May.
  8. Cohen, Daniel & Soto, Marcelo, 2001. "Growth and Human Capital: Good Data, Good Results," CEPR Discussion Papers 3025, C.E.P.R. Discussion Papers.
  9. Antonio Ciccone & Giovanni Peri, 2004. "Long-run substitutability between more and less educated workers: Evidence from U.S. States 1950-1990," Economics Working Papers 764, Department of Economics and Business, Universitat Pompeu Fabra.
  10. Francesco Caselli & Daniel Wilson, 2003. "Importing Technology," NBER Working Papers 9928, National Bureau of Economic Research, Inc.
  11. Acemoglu, Daron & Zilibotti, Fabrizio, 2000. "Productivity Differences," CEPR Discussion Papers 2498, C.E.P.R. Discussion Papers.
  12. Diego Comin & Bart Hobiijn, 2006. "An Exploration of Technology Diffusion," NBER Working Papers 12314, National Bureau of Economic Research, Inc.
  13. Alessandra Bonfiglioli & Gino Gancia, 2007. "North-South Trade and Directed Technical Change," UFAE and IAE Working Papers 713.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC), revised 27 Jun 2008.
  14. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
  15. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing Engines of Growth: Innovation and Standardization," Levine's Working Paper Archive 661465000000000243, David K. Levine.
  16. Fadinger, Harald, 2008. "Productivity Differences in an Interdependent World," MPRA Paper 7603, University Library of Munich, Germany.
  17. Parente, Stephen L. & Prescott, Edward C., 2005. "A Unified Theory of the Evolution of International Income Levels," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 21, pages 1371-1416 Elsevier.
  18. Diego Comin & William Easterly & Erick Gong, 2010. "Was the Wealth of Nations Determined in 1000 BC?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(3), pages 65-97, July.
  19. Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal innovation in the theory of growth and development," Economics Working Papers 831, Department of Economics and Business, Universitat Pompeu Fabra.
  20. David N. Weil, 1996. "Appropriate Technology and Growth," Working Papers 96-24, Brown University, Department of Economics.
  21. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc.
  22. Gino Gancia & Fabrizio Zilibotti, 2008. "Technological change and the wealth of nations," Economics Working Papers 1125, Department of Economics and Business, Universitat Pompeu Fabra.
  23. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
  24. Arvind Subramanian & Devesh Roy, 2001. "Who Can Explain the Mauritian Miracle," IMF Working Papers 01/116, International Monetary Fund.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Towards better growth accounting
    by Economic Logician in Economic Logic on 2011-01-18 14:23:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. German Cubas & B. Ravikumar & Gustavo Ventura, 2013. "Talent, labor quality, and economic development," Working Papers 2013-027, Federal Reserve Bank of St. Louis.
  2. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2012. "Offshoring and Directed Technical Change," NBER Working Papers 18595, National Bureau of Economic Research, Inc.
  3. Harald Fadinger & Karin Mayr, 2012. "Skill-biased technological change, unemployment and brain drain," FIW Working Paper series 089, FIW.
  4. Ariel Burstein & Javier Cravino & Jonathan Vogel, 2011. "Importing Skill-Biased Technology," NBER Working Papers 17460, National Bureau of Economic Research, Inc.
  5. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing engines of growth: innovation and standardization," IEW - Working Papers 483, Institute for Empirical Research in Economics - University of Zurich.
  6. Gino Gancia, 2012. "Globalization, technology and inequality," Economics Working Papers 1363, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2012.

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