Dual Economies and International Total Factor Productivity Differences

Arbeitspapier

This paper argues that a significant part of measured TFP differences across countries is attributable not to technological factors that affect the entire economy neutrally, but rather, to variations in the structural composition of economies. In particular, the allocation of scarce inputs between agriculture and non-agriculture seems to be important. We provide a theory which links the institutional framework to the long-run composition of the economy, and thereby to measured TFP and income per worker. A decomposition analysis suggests that between 30 and 50 percent of the international variation in TFP can be attributed to the composition of output. Estimation exercises suggest that recent findings of a conducive effect from institutions, and to some extent, geography, on long-run prosperity and TFP, may be thus explained.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EPRU Working Paper Series ; No. 2003-09

Classification and Topics

• Classification: Wirtschaft ; One, Two, and Multisector Growth Models ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence ; Economywide Country Studies: General
• Subject: dual economy ; structural change ; total factor productivity ; institutions ; geography ; Dualökonomie ; Produktivität ; Wirtschaftsgeographie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chanda, Areendam ; Dalgaard, Carl-Johan
• Event: Veröffentlichung
• (who): University of Copenhagen, Economic Policy Research Unit (EPRU)
• (where): Copenhagen
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/82076
• Last update: 10.03.2025, 11:42 AM CET