In Search of Larger Per Capita Incomes: How to Prioritize Across Productivity Determinants?

40 Pages Posted: 25 Apr 2017

See all articles by Alejandro Izquierdo

Alejandro Izquierdo

Inter-American Development Bank (IDB) - Research Department

Jimena Llopis

Universitat Pompeu Fabra

Umberto Muratori

Georgetown University

Jose Ruiz

affiliation not provided to SSRN

Date Written: March 2016

Abstract

This study is a first contribution to prioritization across productivity determinant capabilities that attempts to obtain the equivalent of a "shadow price" for each of these capabilities by estimating their impact on the success a country may have in reaching higher income per capita groups. The prioritization of these determinants--spanning different sectors'--seems to be specific to the income per capita group to which a country belongs. Moreover, empirical estimates reveal that interactions among sectors matter for increasing the probability of climbing up the income-per-capita ladder, reflecting the existence of complementarities across sectors, thus indicating that the joint improvement of some of them may be necessary before effects are noticeable. Results also indicate that the identification of priorities by looking at the impact that sectors have on increasing the likelihood of advancing to a better income per capita group may or may not coincide with the size of sector gaps typically used for the determination of priorities, as larger gaps do not necessarily capture the relevance of sectoral restrictions and their interactions.

Keywords: Development, Productivity, Per capita income priorities, Growth

JEL Classification: O10, O40, O47

Suggested Citation

Izquierdo, Alejandro and Llopis, Jimena and Muratori, Umberto and Ruiz, Jose, In Search of Larger Per Capita Incomes: How to Prioritize Across Productivity Determinants? (March 2016). IDB Working Paper No. IDB-WP-680, Available at SSRN: https://ssrn.com/abstract=2956688 or http://dx.doi.org/10.2139/ssrn.2956688

Alejandro Izquierdo (Contact Author)

Inter-American Development Bank (IDB) - Research Department ( email )

1300 New York Ave., NW
Washington, DC 20577
United States

Jimena Llopis

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Umberto Muratori

Georgetown University

Jose Ruiz

affiliation not provided to SSRN

No Address Available

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