Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185394
Authors: 
Cuñat, Alejandro
Zymek, Robert
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7196
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.
Subjects: 
world input-output
development accounting
productivity
JEL: 
E01
F15
F40
F62
F63
Document Type: 
Working Paper

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