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Natural Resources and Global Misallocation

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  • Monge-Naranjo, Alexander

    () (Federal Reserve Bank of St. Louis)

  • Sanchez, Juan M.

    () (Federal Reserve Bank of St. Louis)

  • Santaeulalia-Llopis, Raul

    (Washington University in St. Louis, Universitat de Valencia, and CEMFI)

Abstract

Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we provide a new methodology to estimate output shares of natural resources based solely on current rent flows data. With this methodology, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries. In sharp contrast with Caselli and Feyrer (2007), we find a significant and persistent degree of misallocation of physical capital. We also find a remarkable movement toward efficiency during last 35 years, associated with the elimination of interventionist policies and driven by domestic accumulation. Interestingly, when both physical and human capital can be reallocated, capital would often flow from poor to rich countries.

Suggested Citation

  • Monge-Naranjo, Alexander & Sanchez, Juan M. & Santaeulalia-Llopis, Raul, 2015. "Natural Resources and Global Misallocation," Working Papers 2015-36, Federal Reserve Bank of St. Louis, revised 09 Oct 2017.
  • Handle: RePEc:fip:fedlwp:2015-036
    DOI: 10.20955/wp.2015.036
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    Cited by:

    1. Bullard, James B., 2016. "A New Characterization of the U.S. Macroeconomic and Monetary Policy Outlook : a speech at the Society of Business Economists Annual Dinner, London, United Kingdom, June 30, 2016," Speech 271, Federal Reserve Bank of St. Louis.

    More about this item

    Keywords

    Factor Shares; Capital Formation; Human Capital; International Flows;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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