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Income Differences, Productivity and Input-Output Networks

Harald Fadinger, Christian Ghiglino and Mariya Teteryatnikova ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We study the importance of input-output (IO) linkages and sectoral productivity (TFP) levels in determining cross-country income differences. Using data on IO tables and sectoral TFP levels for 38 countries, we uncover important differences in the interaction of IO structure with sectoral TFP levels across countries: while highly connected sectors are more productive than the typical sector in poor countries, the opposite is true in rich ones. To assess the quantitative role of linkages and sectoral TFP differences in cross-country income differences, we decompose cross-country variation in real GDP per worker using a multi-sector general equilibrium model. We find that these features explain between 8 and 10 percent of cross-country income variation.

Keywords: input-output structure; productivity; cross-country income differences; development accounting (search for similar items in EconPapers)
JEL-codes: C67 D85 O11 O14 O47 (search for similar items in EconPapers)
Pages: 44
Date: 2020-04
New Economics Papers: this item is included in nep-eff, nep-hme and nep-net
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