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Discussion Paper Details

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Title: Structural Development Accounting

Author(s): Gino Gancia, Andreas M�ller and Fabrizio Zilibotti

Publication Date: February 2011

Keyword(s): Development Accounting, Directed Technology Adoption, Distance to Frontier, Inappropriate Technologies, Productivity, Skill-biased Technical Change and TFP differences

Programme Area(s): International Macroeconomics and International Trade and Regional Economics

Abstract: 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 are different types of workers, 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 86 countries in 1970 and 122 countries in 2000. Removing barriers to technology adoption would increase the output per worker of the average non-OECD country relative to the US from 0.19 to 0.61, while increasing skill premia in all countries. Removing barriers to 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 IPR protection.

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Bibliographic Reference

Gancia, G, M�ller, A and Zilibotti, F. 2011. 'Structural Development Accounting'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8254