Productivity Differences in an Interdependent World

Harald Fadinger ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies cross country differences in productivity from an open economy perspective by using a Helpman-Krugman-Heckscher-Ohlin model. This allows to combine tools from development accounting and the trade literature. When simultaneously fitting data on income, factor prices and the factor content of trade, I find that rich countries have far higher productivities of human capital than poor ones, while differences in physical capital productivity are not systematically related to income per worker. I estimate an aggregate elasticity of substitution between human and physical capital that is significantly below one, clearly rejecting a world that consists of a collection of Cobb-Douglas economies and also one where Heckscher-Ohlin trade is important.

Keywords: Heckscher-Ohlin; Productivity Differences; Development Accounting; Open Economy Growth (search for similar items in EconPapers)
JEL-codes: O11 O41 O47 F11 F43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-int and nep-opm
Date: 2008-03
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:7603

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