Industrial Productivity in 51 Countries, Rich and Poor
AbstractThis Discussion Paper analyses 23 industrial sector in a sample of 51 developed and developing countries. It distinguishes the contribution of five factors: private capital, infrastructure, education, trade integration, and net efficiency. Several relatively small handicaps, combined multiplicatively, can make a country poor or very poor. In average, the average productivity of the industrial sector is indeed the product of about five times 70%. But 0.70 to the power of five is 17%. The least productive country in the sample, Bangladesh, has a productivity level worth about 2% of that of the richest nations. From this perspective, industry is not much different from aggregate GDP such as analysed in Cohen and Soto (2004) where a similar picture emerged The paper then sheds light on the effect of TFP differential between industry and GDP at large on the relative price of manufactured goods. We show that productivity differentials explain about half of the relative price discrepancy. It then analyses the extent to which this is an explanation of the Lucas Paradox. So far as manufacturing is concerned the paper highlights an "anti-Lucas" paradox whereby the capital output ratio is higher in poor countries than in rich countries. This result tends to deflate the theories according to which fear of expropriation is the critical explanation of the low level of capital in the economy at large.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5549.
Date of creation: Mar 2006
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-08 (All new papers)
- NEP-EFF-2006-04-08 (Efficiency & Productivity)
- NEP-INT-2006-04-08 (International Trade)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francisco Alcalá & Antonio Ciccone, 2004.
"Trade and Productivity,"
The Quarterly Journal of Economics,
MIT Press, vol. 119(2), pages 612-645, May.
- Francisco Alcalá & Antonio Ciccone, 2001. "Trade and productivity," Economics Working Papers 580, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2002.
- Francisco Alcalá & Antonio Ciccone, 2003. "Trade and Productivity," Working Papers 12, Barcelona Graduate School of Economics.
- Alcala, Francisco & Ciccone, Antonio, 2001. "Trade and Productivity," CEPR Discussion Papers 3095, C.E.P.R. Discussion Papers.
- Francisco Rodriguez & Dani Rodrik, 1999.
"Trade Policy and Economic Growth: a Skeptic's Guide to the Cross-National Evidence,"
9912, Economic Research Forum, revised Apr 1999.
- Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
- Rodríguez, Francisco & Rodrik, Dani, 1999. "Trade Policy and Economic Growth: A Sceptic's Guide to the Cross-National Evidence," CEPR Discussion Papers 2143, C.E.P.R. Discussion Papers.
- Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May.
- Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004.
"Do Institutions Cause Growth?,"
Journal of Economic Growth,
Springer, vol. 9(3), pages 271-303, 09.
- Jeffrey D. Sachs & Andrew Warner, 1995.
"Economic Reform and the Process of Global Integration,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
- Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
- Cohen, Daniel & Soto, Marcelo, 2001.
"Growth and Human Capital: Good Data, Good Results,"
CEPR Discussion Papers
3025, C.E.P.R. Discussion Papers.
- Juan Carlos Hallak & James Levinsohn, 2004.
"Fooling Ourselves: Evaluating the Globalization and Growth Debate,"
509, Research Seminar in International Economics, University of Michigan.
- Juan Carlos Hallak & James Levinsohn, 2004. "Fooling Ourselves: Evaluating the Globalization and Growth Debate," NBER Working Papers 10244, National Bureau of Economic Research, Inc.
- Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
- Paul Collier & Jan Willem Gunning, 1998.
"Explaining African economic performance,"
Economics Series Working Papers
WPS/1997-02.2, University of Oxford, Department of Economics.
- Canning, David & Bennathan, Esra, 2000. "The social rate of return on infrastructure investments," Policy Research Working Paper Series 2390, The World Bank.
- Daniel Cohen; Marcelo Soto, 2004. "Why are poor countries poor?," Econometric Society 2004 Latin American Meetings 75, Econometric Society.
- Sébastien Dessus & Rémy Herrera, 1996. "Le rôle du capital public dans la croissance des pays en développement au cours des années 80," OECD Development Centre Working Papers 115, OECD Publishing.
- Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth : revisiting the evidence," Policy Research Working Paper Series 3004, The World Bank.
- Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
- Robert C. Feenstra & Hiau Looi Kee, 2004.
"Export Variety and Country Productivity,"
NBER Working Papers
10830, National Bureau of Economic Research, Inc.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2001.
"The Colonial Origins of Comparative Development: An Empirical Investigation,"
American Economic Review,
American Economic Association, vol. 91(5), pages 1369-1401, December.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
- Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
- Arup Mitra & Aristomène Varoudakis & Marie-Ange Véganzonès, 1998. "State Infrastructure and Productive Performance in Indian Manufacturing," OECD Development Centre Working Papers 139, OECD Publishing.
- Douglas A. Irwin & Marko Tervio, 2000.
"Does Trade Raise Income? Evidence from the Twentieth Century,"
NBER Working Papers
7745, National Bureau of Economic Research, Inc.
- Irwin, Douglas A. & Tervio, Marko, 2002. "Does trade raise income?: Evidence from the twentieth century," Journal of International Economics, Elsevier, vol. 58(1), pages 1-18, October.
- María Teresa Ramírez & Hadi Salehi Esfahani, .
"Infrastructure and Economic Growth,"
Borradores de Economia
123, Banco de la Republica de Colombia.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- William Easterly & Ross Levine, 2002.
"It's Not Factor Accumulation: Stylized Facts and Growth Models,"
Working Papers Central Bank of Chile
164, Central Bank of Chile.
- William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114 Central Bank of Chile.
- David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
- Reinikka, Ritva & Svensson, Jakob, 1999. "How inadequate provision of public infrastructure and services affects private investment," Policy Research Working Paper Series 2262, The World Bank.
- Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
- E.C. Mamatzakis, 2002. "Public Infrastructure And Private Output: An Application To Greece," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 27(2), pages 143-160, December.
- Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
- Kanda Naknoi & Allan D. Brunner, 2003. "Trade Costs, Market Integration, and Macroeconomic Volatility," IMF Working Papers 03/54, International Monetary Fund.
- Gertler, Mark & Rogoff, Kenneth, 1990. "North-South lending and endogenous domestic capital market inefficiencies," Journal of Monetary Economics, Elsevier, vol. 26(2), pages 245-266, October.
- Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
- Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
- Robert Eisner, 1991. "Infrastructure and regional economic performance: comment," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 47-58.
- 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.
- World Bank, 2009. "China : Mid-Term Evaluation of China's Eleventh Five-Year," World Bank Other Operational Studies 3025, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.