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International Value-Added Linkages in Development Accounting

Alejandro Cunat () and Robert Zymek ()

No 7196, CESifo Working Paper Series from CESifo Group Munich

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)
New Economics Papers: this item is included in nep-int and nep-mac
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
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Working Paper: International Value-Added Linkages in Development Accounting (2017) Downloads
Working Paper: International Value-Added Linkages in Development Accounting (2017) Downloads
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