Structural Development Accounting

University of Zurich Department of Economics Working Paper No. 10

47 Pages Posted: 29 Mar 2011

See all articles by Gino Gancia

Gino Gancia

Queen Mary University of London; Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI)

Andreas Müller

University of Oslo, Department of Economics

Fabrizio Zilibotti

Yale University; Centre for Economic Policy Research (CEPR)

Date Written: February 4, 2011

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.

Keywords: Directed Technology Adoption, Development Accounting, Distance to Frontier, Inappropriate Technologies, Skill-biased Technical Change, Productivity, TFP differences

JEL Classification: F43, O11, O31, O33, O38, O41, O43, O47

Suggested Citation

Gancia, Gino and Müller, Andreas and Zilibotti, Fabrizio, Structural Development Accounting (February 4, 2011). University of Zurich Department of Economics Working Paper No. 10, Available at SSRN: https://ssrn.com/abstract=1793742 or http://dx.doi.org/10.2139/ssrn.1793742

Gino Gancia (Contact Author)

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Andreas Müller

University of Oslo, Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

HOME PAGE: http://www.sv.uio.no/econ/english/people/aca/andrmu/index.html

Fabrizio Zilibotti

Yale University ( email )

New Haven, CT 06520
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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