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Structural Development Accounting

Author

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  • Gino Gancia
  • Andreas Müller
  • 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 amplifies 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.

Suggested Citation

  • Gino Gancia & Andreas Müller & Fabrizio Zilibotti, 2010. "Structural Development Accounting," Working Papers 494, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:494
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    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 20:23:00

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    Cited by:

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    2. German Cubas & B. Ravikumar & Gustavo Ventura, 2016. "Talent, Labor Quality, and Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 160-181, July.
    3. Acemoglu, Daron & Gancia, Gino & Zilibotti, Fabrizio, 2012. "Competing engines of growth: Innovation and standardization," Journal of Economic Theory, Elsevier, vol. 147(2), pages 570-601.3.
    4. Harald Fadinger & Karin Mayr, 2014. "Skill-Biased Technological Change, Unemployment, And Brain Drain," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 397-431, April.
    5. Alessandra Bonfiglioli & Rosario Crinò & Gino Gancia, 2018. "Firms and Economic Performance: A View from Trade," Working Papers 1047, Barcelona Graduate School of Economics.
    6. Oscar Afonso & Tiago Sequeira, 2020. "Tradable and nontradable directed technical change," Applied Economics, Taylor & Francis Journals, vol. 52(36), pages 3874-3897, July.
    7. Alessandra Bonfiglioli & Gino Gancia, 2019. "Heterogeneity, selection and labor market disparities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 305-325, January.
    8. Ariel Burstein & Javier Cravino & Jonathan Vogel, 2013. "Importing Skill-Biased Technology," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 32-71, April.
    9. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2015. "Offshoring and Directed Technical Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 84-122, July.
    10. Beerli, Andreas & Weiss, Franziska J. & Zilibotti, Fabrizio & Zweimüller, Josef, 2020. "Demand forces of technical change evidence from the Chinese manufacturing industry," China Economic Review, Elsevier, vol. 60(C).
    11. Gino Gancia, 2012. "Globalization, technology and inequality," Economics Working Papers 1363, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2012.
    12. Schiopu, Ioana, 2015. "Technology adoption, human capital formation and income differences," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 318-335.
    13. German Cubas & B. Ravikumar & Gustavo Ventura, 2016. "Talent, Labor Quality, and Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 160-181, July.
    14. Jerzmanowski, Michal & Tamura, Robert, 2019. "Directed technological change & cross-country income differences: A quantitative analysis," Journal of Development Economics, Elsevier, vol. 141(C).

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    More about this item

    Keywords

    Directed Technology Adoption; development accounting; Distance to Frontier; Inappropriate Technologies; Skill-biased Technical Change; Productivity; TFP differences;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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