Explaining cross-country differences in productivity: is it efficiency or factor endowments?

Eddie Gerba () and Emmanuel V. Pikoulakis

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper we develop a two-sector growth model of optimizing agents and apply this model to the data for the purpose of addressing the two interrelated questions that preoccupy the literature on development and growth accounting, namely: (1) What determines sustained growth and (2) What explains the vast cross-country differences in labor productivity. Concerning the first questions our findings support the view that to some extend the growth in effective human capital is a by-product of learning-by-doing. On the second question we find that differences in factors of production explain twice as much of the difference in labor productivity between developed and developing countries than differences in efficiency.

Keywords: two-sector growth model; effective human capital; education quality (search for similar items in EconPapers)
JEL-codes: J24 O41 O47 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-10
New Economics Papers: this item is included in nep-eff and nep-gro
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:56399

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