Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82076
Authors: 
Chanda, Areendam
Dalgaard, Carl-Johan
Year of Publication: 
2003
Series/Report no.: 
EPRU Working Paper Series 2003-09
Abstract: 
This paper argues that a significant part of measured TFP differences across countries is attributable not to technological factors that affect the entire economy neutrally, but rather, to variations in the structural composition of economies. In particular, the allocation of scarce inputs between agriculture and non-agriculture seems to be important. We provide a theory which links the institutional framework to the long-run composition of the economy, and thereby to measured TFP and income per worker. A decomposition analysis suggests that between 30 and 50 percent of the international variation in TFP can be attributed to the composition of output. Estimation exercises suggest that recent findings of a conducive effect from institutions, and to some extent, geography, on long-run prosperity and TFP, may be thus explained.
Subjects: 
dual economy
structural change
total factor productivity
institutions
geography
JEL: 
O41
O47
O50
Document Type: 
Working Paper

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