International Value-Added Linkages in Development Accounting

Alejandro Cunat and Robert Zymek

No 7196, CESifo Working Paper Series from CESifo

Abstract: We generalise the traditional development-accounting framework to an open-economy setting. In addition to factor endowments and productivity, relative factor costs emerge as a source of real-income variation across countries. These are shaped by bilateral trade determinants (which underpin the patterns of “international value-added linkages”) and the global distribution of factor endowments and final expenditures. We use information on endowments, trade balances and value-added trade to back out the relative factor costs of 40 major economies in a theory-consistent manner. This reduces the variation in “residual” productivity required to explain the observed per-capita income differences by more than one half.

Keywords: world input-output; development accounting; productivity (search for similar items in EconPapers)
JEL-codes: E01 F15 F40 F62 F63 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: International Value-Added Linkages in Development Accounting (2017)
Working Paper: International Value-Added Linkages in Development Accounting (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7196

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