IDEAS home Printed from https://ideas.repec.org/a/taf/nzecpp/v43y2009i1p21-39.html
   My bibliography  Save this article

Capital intensity and welfare: traded and non-trade sector determinants

Author

Listed:
  • Arthur Grimes

Abstract

Why do some countries and regions have higher capital intensity than others? This question is at the heart of economic development analyses since capital intensity, per capita incomes and welfare are closely linked. We develop a two-sector general equilibrium model relevant to small open economies that import capital goods and produce export goods priced in world markets. The model is used to derive a taxonomy of factors that lead to differing capital intensities across countries. Aggregate capital intensity is a function of multi-factor productivity (MFP) in the traded goods sector (but not the non-traded sector), the capital share parameter for each sector, the cost of capital and the terms of trade. Total output and consumer utility are affected by the same variables and by non-traded sector MFP. The results shed light on observed capital intensity and per capita GDP differences between Australia and New Zealand.

Suggested Citation

  • Arthur Grimes, 2009. "Capital intensity and welfare: traded and non-trade sector determinants," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(1), pages 21-39.
  • Handle: RePEc:taf:nzecpp:v:43:y:2009:i:1:p:21-39
    DOI: 10.1080/00779950902803969
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00779950902803969
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Razzak, Weshah, 2013. "An Empirical Study of Sectoral-Level Capital Investments in New Zealand," MPRA Paper 52461, University Library of Munich, Germany.
    2. Arthur Grimes, 2010. "The Economics of Infrastructure Investment: Beyond Simple Cost Benefit Analysis," Working Papers 10_05, Motu Economic and Public Policy Research.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:43:y:2009:i:1:p:21-39. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://www.tandfonline.com/RNZP20 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.