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Development Accounting

Author Info

  • Chang-Tai Hsieh
  • Peter J. Klenow

Abstract

Researchers have made much progress in the past 25 years in accounting for the proximate determinants of income levels: physical capital, human capital, and Total Factor Productivity (TFP). But we still know little about why these factors vary. We argue that TFP exerts a powerful influence on output not only directly, but also indirectly, through its effect on physical and human capital accumulation. We discuss why TFP varies across countries, highlighting misallocation of inputs across firms and industries as a key determinant. (JEL E22, E23, F21, F35, O10, O40)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mac.2.1.207
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File URL: http://www.aeaweb.org/aej/mac/data/2009-0054_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

Volume (Year): 2 (2010)
Issue (Month): 1 (January)
Pages: 207-23

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Handle: RePEc:aea:aejmac:v:2:y:2010:i:1:p:207-23
Note: DOI: 10.1257/mac.2.1.207
Contact details of provider: Web page: https://www.aeaweb.org/aej-macro
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Keywords:

Find related papers by JEL classification:

  • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
  • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
  • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
  • F35 - International Economics - - International Finance - - - Foreign Aid
  • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
  • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

References listed on IDEAS
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  1. Andrés Erosa & Tatyana Koreshkova & Diego Restuccia, 2010. "How Important Is Human Capital? A Quantitative Theory Assessment of World Income Inequality," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1421-1449.
  2. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
  3. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August.
  4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
  5. Roc Armenter & Amartya Lahiri, 2006. "Endogenous productivity and development accounting," Staff Reports 258, Federal Reserve Bank of New York.
  6. Juan Carlos Cordoba & Marla Ripoll, 2005. "Endogenous TFP and Cross-Country Income Differences," Development and Comp Systems 0512018, EconWPA.
  7. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  8. Lutz Hendricks, 2002. "How Important Is Human Capital for Development? Evidence from Immigrant Earnings," American Economic Review, American Economic Association, vol. 92(1), pages 198-219, March.
  9. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
  10. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
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  1. Development Accounting (AEJ:MA 2010) in ReplicationWiki
  2. Economic Growth

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