Accounting for Cross-Country Income Differences
Francesco Caselli ()
No 4703, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Why are some countries so much richer than others? Development Accounting is a first-pass attempt at organizing the answer around two proximate determinants: factors of production and efficiency. It answers the question ‘how much of the cross-country income variance can be attributed to differences in (physical and human) capital, and how much to differences in the efficiency with which capital is used?’ Hence, it does for the cross-section what growth accounting does in the time series. The current consensus is that efficiency is at least as important as capital in explaining income differences. I survey the data and the basic methods that lead to this consensus, and explore several extensions. I argue that some of these extensions may lead to a reconsideration of the evidence.
Keywords: development; factor supplies; technology (search for similar items in EconPapers)
JEL-codes: E20 O10 O20 O30 O40 O50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-mac
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Chapter: Accounting for Cross-Country Income Differences (2005)
Working Paper: Accounting for Cross-Country Income Differences (2005)
Working Paper: Accounting for Cross-Country Income Differences (2004)
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