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Misallocation and Aggregate Productivity across Time and Space

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  • Diego Restuccia

Abstract

Productivity is at the core of the large differences in income per capita across countries. What accounts for international productivity differences? I discuss cross-country differences in the allocation of inputs across heterogeneous production units-misallocation-as a potential factor in accounting for aggregate productivity. Policies and institutions generating misallocation are prevalent in poor and developing countries and may also be responsible for differences in the selection of operating producers and technology used, contributing substantially to aggregate productivity differences across countries.

Suggested Citation

  • Diego Restuccia, 2018. "Misallocation and Aggregate Productivity across Time and Space," Working Papers tecipa-608, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-608
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    More about this item

    Keywords

    productivity; misallocation; selection; technology; regulation; trade; financial frictions; agriculture.;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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