Arbeitspapier
Which Sectors Make the Poor Countries so Unproductive?
Standard growth accounting exercises find large cross-country differences in aggregate TFP. Here we ask whether specific sectors are driving these differences, and, if this is the case, which these problem sectors are. We argue that to answer these questions we need to consider four sectors. In contrast, the literature typically considers only two sectors. Our four sectors produce services (nontradable consumption), consumption goods (tradable consumption), construction (nontradable investment), and machinery and equipment (tradable investment). Interacting the data from the 1996 benchmark study of the Penn World Tables with economic theory, we find that the TFP differences across countries are much larger in the two tradable sectors than in the two nontradable sectors. This is consistent with the Balassa-Samuelson hypothesis. We also find that within the tradable sectors the TFP differences are much larger in machinery and equipment than in consumption goods. We illustrate the usefulness of our findings by accounting for the conflicting results of the existing two-sector analyses and by developing criteria for a successful theory of aggregate TFP.
- Language
-
Englisch
- Bibliographic citation
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Series: IEHAS Discussion Papers ; No. MT-DP - 2005/19
- Classification
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Wirtschaft
Industrialization; Manufacturing and Service Industries; Choice of Technology
One, Two, and Multisector Growth Models
Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- Subject
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development accounting
sector TFPs
relative prices
- Event
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Geistige Schöpfung
- (who)
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Herrendorf, Berthold
Valentinyi, Akos
- Event
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Veröffentlichung
- (who)
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Hungarian Academy of Sciences, Institute of Economics
- (where)
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Budapest
- (when)
-
2005
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Herrendorf, Berthold
- Valentinyi, Akos
- Hungarian Academy of Sciences, Institute of Economics
Time of origin
- 2005
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