Productivity differences in an interdependent world

Harald Fadinger

Journal of International Economics, 2011, vol. 84, issue 2, 221-232

Abstract: This paper studies cross-country differences in productivity from an open economy perspective by using a Helpman-Krugman-Heckscher-Ohlin model that embraces the single-cone model and a one-sector economy with factor deepening as particular cases. To estimate the model, I combine tools from development accounting and the factor content of trade literature. When simultaneously fitting data on income, factor prices and the factor content of trade, I find that the one-sector model is by far better supported by the data than the single-cone model. Rich countries have far higher productivities of human capital than poor ones, while differences in physical capital productivity are not related to income per worker. Finally, I estimate an aggregate elasticity of substitution between human and physical capital that is significantly below one.

Keywords: Heckscher-Ohlin; Productivity; differences; Development; accounting; Open; economy; growth (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (10)

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Working Paper: Productivity Differences in an Interdependent World (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:84:y:2011:i:2:p:221-232

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