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Structural Development Accounting

  • Gino Gancia
  • Andreas Müller
  • Fabrizio Zilibotti

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.

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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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  1. Gancia, Gino & Bonfiglioli, Alessandra, 2008. "North-South trade and directed technical change," Journal of International Economics, Elsevier, vol. 76(2), pages 276-295, December.
  2. 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.
  3. Daron Acemoglu & Fabrizio Zilbotti, 1999. "Productivity Differences," NBER Working Papers 6879, National Bureau of Economic Research, Inc.
  4. Daron Acemoglu, 1999. "Patterns of Skill Premia," NBER Working Papers 7018, National Bureau of Economic Research, Inc.
  5. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1055-1089.
  6. Stephen L. Parente & Edward C. Prescott, 2004. "A unified theory of the evolution of international income levels," Staff Report 333, Federal Reserve Bank of Minneapolis.
  7. Fabrizio Zilibotti & Gino Gancia, 2009. "Technological Change and the Wealth of Nations," 2009 Meeting Papers 499, Society for Economic Dynamics.
  8. Acemoglu, Daron & Aghion, Philippe & Zilibotti, Fabrizio, 2002. "Distance to Frontier, Selection, and Economic Growth," CEPR Discussion Papers 3467, C.E.P.R. Discussion Papers.
  9. 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.
  10. 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.
  11. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
  12. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing Engines of Growth: Innovation and Standardization," NBER Working Papers 15958, National Bureau of Economic Research, Inc.
  13. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
  14. Ciccone, Antonio & Papaioannou, Elias, 2006. "Human capital, the structure of production, and growth," Working Paper Series 0623, European Central Bank.
  15. Fadinger, Harald, 2008. "Productivity Differences in an Interdependent World," MPRA Paper 7603, University Library of Munich, Germany.
  16. Diego Comin & Bart Hobijn, 2005. "Lobbies and Technology Diffusion," NBER Working Papers 11022, National Bureau of Economic Research, Inc.
  17. Antonio Ciccone & Giovanni Peri, 2005. "Long-Run Substitutability Between More and Less Educated Workers: Evidence from U.S. States, 1950-1990," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 652-663, November.
  18. Diego Comin & Bart Hobijn, 2010. "An Exploration of Technology Diffusion," American Economic Review, American Economic Association, vol. 100(5), pages 2031-59, December.
  19. Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal Innovation in the Theory of Growth and Development," Working Papers 200, Barcelona Graduate School of Economics.
  20. 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.
  21. Francesco Caselli & Daniel J. Wilson, 2002. "Importing technology," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  22. Susanto Basu & David N. Weil, 1998. "Appropriate Technology and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1025-1054.
  23. Caselli, Francesco & Coleman II, Wilbur John, 2000. "The World Technology Frontier," CEPR Discussion Papers 2584, C.E.P.R. Discussion Papers.
  24. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, March.
  25. 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.
  26. Arvind Subramanian & Devesh Roy, 2001. "Who Can Explain The Mauritian Miracle; Meade, Romer, Sachs or Rodrik?," IMF Working Papers 01/116, International Monetary Fund.
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