Accounting for Cross-Country Income Differences

Francesco Caselli ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Why are some countries so much richer than others? Development Accounting is a first-passattempt at organizing the answer around two proximate determinants: factors of productionand efficiency. It answers the question "how much of the cross-country income variance canbe attributed to differences in (physical and human) capital, and how much to differences inthe efficiency with which capital is used?" Hence, it does for the cross-section what growthaccounting does in the time series. The current consensus is that efficiency is at least asimportant as capital in explaining income differences. I survey the data and the basicmethods that lead to this consensus, and explore several extensions. I argue that some ofthese extensions may lead to a reconsideration of the evidence.

Keywords: income variance; capital; development accounting (search for similar items in EconPapers)
JEL-codes: D31 O15 O19 M00 M41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: Written
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Related works:
Chapter: Accounting for Cross-Country Income Differences (2005)
Working Paper: Accounting for Cross-Country Income Differences (2004)
Working Paper: Accounting for Cross-Country Income Differences (2004)
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