Accounting for cross-country income differences.
Centre for Economic Policy Research, London, UK.
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Why are some countries so much richer than others? Development Accounting is a first-pass attempt at organizing the answer around two proximate determinants: factors of production and efficiency. It answers the question ‘how much of the cross-country income variance can be attributed to differences in (physical and human) capital, and how much to differences in the efficiency with which capital is used?’ Hence, it does for the cross-section what growth accounting does in the time series. The current consensus is that efficiency is at least as important as capital in explaining income differences. I survey the data and the basic methods that lead to this consensus, and explore several extensions. I argue that some of these extensions may lead to a reconsideration of the evidence.
||© 2004 Francesco Caselli
||development; technology; factor supplies
|Library of Congress subject classification:
||H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
|Journal of Economic Literature Classification System:
||O - Economic Development, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E20 - General
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O10 - General
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O50 - General
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