Accounting for Cross-Country Income Differences

By Francesco Caselli. 2004

1,402 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/b434c2529a4041f27fddddc788f6af59b5f8253a

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Citations in the corpus

Structural Change Out of Agriculture: Labor Push Versus Labor Pull (2011, positive): “Given the continuing importance of the agricultural sector in today’s poor economies and its impact on aggregate productivity differences documented by Caselli (2005), Temple and Woessmann (2006) and Restuccia, Yang and Zhu (2008), among others, it is crucial to have a proper understanding of the hi”
Dualism and cross-country growth regressions (2006, positive): “Also relevant, Caselli (2005) , Chanda and Dalgaard (2005) and Restuccia et al. (2006) include discussions of aggregate TFP that take into account cross-country differences in sectoral composition.”
Land Reform and Productivity: A Quantitative Analysis with Micro Data (2019, positive): “…Xu, 2008; and Hsieh and Klenow, 2009) into the study of the agricultural productivity gap across countries (e.g. Gollin, Parente and Rogerson, 2004; Caselli, 2005; Restuccia, Yang and Zhu, 2008; Adamopoulos, 2011; Lagakos and Waugh, 2013; Herrendorf and Schoellman, 2013; Gollin, Lagakos, and…”
Trade, Domestic Frictions, and Scale Effects (2016, positive): “In particular, the system in (20) can be solved for ŵm for m ∈ Ωn for some particular country n given data on region-level trade shares ψkm for all k,m ∈ Ωn and region-level expenditure shares Xm for all m ∈ Ωn.”
Harvesting Prosperity: Technology and Productivity Growth in Agriculture (2019, positive): “Interest in the APG has been rekindled recently, following Caselli (2005), as growth economists search for an explanation for the large divergence in standards of living across countries, and across sectors within countries (Gollin, Parente, and Rogerson 2007; Cordoba and Ripoll 2009; Restuccia, Yan”
The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia (2017, positive): “Our approach is similar, therefore, to the development accounting and macro misallocation literatures (Caselli 2005; Hsieh and Klenow 2009).”
Selection, Agriculture, and Cross-Country Productivity Differences (2013, neutral): “Cross-country labor productivity differences are much larger in agriculture than in the nonagricultural sector (Caselli, 2005; Restuccia, Yang, and Zhu, 2008).”
Schooling, educational achievement, and the Latin American growth puzzle (2012, positive): “…growth parameters but rather takes them from the microeconomic literature and derives structure in the macroeconomic analysis by assuming a particular functional form of the macroeconomic production function (see Caselli (2005) and Hsieh and Klenow (2010) for details on the underlying con- cept).”
Institutions, Entrepreneurship, and Economic Growth: What Do We Know and What Do We Still Need to Know? (2016, positive): “Omitted-Variable Bias As in many other fields, such as the literature on regional and national productivity and development accounting (Caselli, 2005; Klenow & RodriguezClare, 1997), the entrepreneurship literature has not converged on a consensus onwhat to consider as a standard or even minimalist ”