Foreign Know-How, Firm Control, and the Income of Developing Countries-super-*

Ariel T. Burstein and Alexander Monge-Naranjo
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Ariel T. Burstein: Department of Economics, University of California, Los Angeles
Alexander Monge-Naranjo: Department of Economics, Pennsylvania State University

The Quarterly Journal of Economics, 2009, vol. 124, issue 1, pages 149-195

Abstract: Management know-how shapes the productivity of firms and can be reallocated across countries as managers acquire control of factors of production abroad. We construct a quantitative model to investigate the aggregate consequences of the international reallocation of management know-how. Using aggregate data, we infer the relative scarcity of this form of know-how in a sample of developing countries. We find that developing countries gain, on average, 12% in output and 5% in welfare (with wide variation across countries) when they eliminate policy barriers to foreign control of domestic factors of production. (c) 2009 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

Date: 2009
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