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Structural Development Accounting

  • Gino Gancia
  • Andreas Müller and 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: Sep 2015
Date of revision:
Handle: RePEc:bge:wpaper:494
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  1. Stephen L Parente & Edward C Prescott, 2004. "A Unified Theory of the Evolution of International Income Levels," Levine's Working Paper Archive 122247000000000300, David K. Levine.
  2. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing engines of growth: Innovation and standardization," Economics Working Papers 1358, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2010.
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  4. Ciccone, Antonio & Papaioannou, Elias, 2006. "Human capital, the structure of production, and growth," Working Paper Series 0623, European Central Bank.
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  7. Gino Gancia & Alessandra Bonfiglioli, 2015. "North-South Trade and Directed Technical Change," Working Papers 321, Barcelona Graduate School of Economics.
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  14. Acemoglu, Daron & Aghion, Philippe & Zilibotti, Fabrizio, 2002. "Distance to Frontier, Selection, and Economic Growth," CEPR Discussion Papers 3467, C.E.P.R. Discussion Papers.
  15. Daron Acemoglu, 1999. "Patterns of Skill Premia," NBER Working Papers 7018, National Bureau of Economic Research, Inc.
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  20. 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.
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  24. Gancia, Gino & Zilibotti, Fabrizio, 2005. "Horizontal Innovation in the Theory of Growth and Development," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 3, pages 111-170 Elsevier.
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