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Productive Capabilities: An Empirical Investigation of their Determinants

  • Christian Daude
  • Arne Nagengast
  • José Ramón Perea

Recent contributions to the growth literature have argued that the structure of an economy, as measured by its productive capabilities, is a key determinant for inter-country differences in development. Productive capabilities have been shown to be highly predictive of future economic growth, yet their country-level determinants have remained unknown. In this paper, we empirically explore their determinants using a model averaging framework that can handle a very large number of explanatory variables without the need for model selection. In order to estimate our dynamic panel specification, we propose a novel Bayesian Averaging of Classical Estimates procedure based on the simple and efficient bias-corrected LSDV estimator. Our baseline and robustness analysis consider a large number of variables, sample periods and model priors. We find that the existing stock of capabilities (as measured by the lagged dependent variable), commodity terms of trade, energy availability, government consumption, capital per worker, arable land and capital inflows show a strong and robust association with capabilities. Le concept de complexité économique a été soulevé comme un facteur déterminant des différences du développement entre les pays. La complexité d'une économie est liée à la disponibilité de la connaissance productive, ou le stock existant des capacités productives. Dans cet article, nous explorons empiriquement ses déterminants. Conscient du grand nombre de variables explicatives qui peuvent affecter les capacités, et en conséquence de la complexité d'une économie, nous choisissons d'estimer nos spécifications par une estimation bayésienne périodique, qui considère toutes les combinaisons possibles de spécifications. Cette fonctionnalité est appropriée lorsqu’il y a un grand nombre de variables explicatives et les critères de sélection du modèle ne sont pas connus avec certitude. Notre analyse de robustesse fournit une étude exhaustive des variables qui tiennent une relation significative avec les capacités productives, à travers toutes les combinaisons de modèles possibles, les échantillons de périodes et la probabilité à priori. Parmi ces variables, les termes de l’échange sur les matières de premières, la disponibilité de l’énergie, la consommation publique, le capital par travailleur, les terres arables et les flux de capitaux montrent un effet relativement important et robuste sur les capacités.

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 321.

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Date of creation: 03 Feb 2014
Date of revision:
Handle: RePEc:oec:devaaa:321-en
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  1. Glüzmann, Pablo Alfredo & Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2012. "Exchange rate undervaluation and economic growth: Díaz Alejandro (1965) revisited," Economics Letters, Elsevier, vol. 117(3), pages 666-672.
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