Lecture 12 The Solow Model and Convergence. Noah Williams

Size: px
Start display at page:

Download "Lecture 12 The Solow Model and Convergence. Noah Williams"

Transcription

1 Lecture 12 The Solow Model and Convergence Noah Williams University of Wisconsin - Madison Economics 312 Spring 2010

2 Recall: Balanced Growth Path All per-capita variables grow at rate g. All level variables grow at rate g + n. k = s k α (n + g + d) k ( s k(t) = A(t) ) 1 1 α n + g + d y(t) = ( s A(t) n + g + d ( s K(t) = N (t)a(t) n + g + d ( s Y (t) = N (t)a(t) n + g + d ) α 1 α ) 1 1 α ) α 1 α

3 Figure 6.16 Determination of the Steady State Quantity of Capital per Worker Copyright 2005 Pearson Addison-Wesley. All rights reserved. 6-17

4 Growth Facts Stylized facts, originally due to Kaldor. Empirical regularities of the growth process for the US and for most other industrialized countries 1 Output (real GDP) per worker y = Y N and capital per worker k = K N grow over time at relatively constant and positive rate. 2 They grow at similar rates, so that the ratio between capital and output, K Y is relatively constant over time 3 The real return to capital r (and the real interest rate r d) is relatively constant over time. 4 The capital and labor shares are roughly constant over time.

5 Capital and Output Growth US post-wwii data 300 K/N Y/N Capital and Output, 1948=

6 Capital/Output Ratio 3.6 Capital/Output Ratio

7 Interest Rate and Depreciation d r Implied Depreciation and Interest Rates Percent

8 Evaluation of the Model: Growth Facts The Solow model matches the stylized facts. Output and capital per worker grow at the same constant, positive rate in BGP of model. In long run model reaches BGP. Capital-output ratio K Y constant along BGP Interest rate constant in balanced growth path Capital share equals α, labor share equals 1 α in the model (always, not only along BGP) Success of the model along these dimensions, but source of growth, technological progress, is left unexplained.

9 Some Development Facts Stylized facts for cross-country comparisons. 1 Enormous variation of per worker income across countries. 2 Enormous variation in growth rates of per worker income across countries. 3 Growth rates are not constant over time for a given country. 4 Countries change their relative position in the international income distribution.

10 40 35 Distribution of Relative Per Worker Income Number of Countries Income Per Worker Relative to US

11 Output per Capita as a Share of US Level 100% 75% Canada USA Japan 50% France Germany (W) 25% Italy Britain 0% Years

12 25 Distribution of Average Growth Rates (Real GDP) Between 1960 and Number of Countries Average Growth Rate

13 Evaluation of the Model: Development Facts Differences in income levels across countries explained in the model by differences in s, n and d. Variation in growth rates: in model permanent differences can only be due to differences in rate of technological progress g. Temporary differences can be explained by transition dynamics. That growth rates are not constant over time for a given country can be explained by transition dynamics and/or shocks to n, s and d. Changes in relative position: in the model countries whose s moves up, relative to other countries, move up in income distribution. Reverse with n.

14 The Convergence Hypothesis Fact: Enormous variation in incomes per worker across countries Question: Do poor countries eventually catch up? Convergence hypothesis: They do, in the right sense. Main prediction of convergence hypothesis: Poor countries should grow faster (per capita) than rich countries. Why? Recall: k k = skα 1 (n + d), and: ẏ y = α k k

15 The Solow Model and Convergence Analyze countries with same s, n, d, α, g Eventually same growth rate of output per worker and same level of output per worker (absolute convergence). Countries starting further below the balanced growth path (poorer countries) should grow faster than countries closer to balanced growth path. Seems to be the case for the sample of now industrialized countries. World capital markets should speed this process. Capital should flow from rich (high K low MPK) to poor countries (low K, high MPK).

16 Figure 1.a: Growth Rate Versus Initial Per Capita GDP 3 JPN Growth Rate of Per Capita GDP, NOR FIN ITL CAN DNK GER SWE AUT FRA BEL NLD USA GBR NZL AUS Per Capita GDP, 1885

17 Figure 1.b: Growth Rate Versus Initial Per Capita GDP 5 JPN Growth Rate of Per Capita GDP, TUR POR GRC ESP IRL ITL FRA AUT BEL FIN GER NOR GBR DNK SWE NLD CAN CHE AUS USA NZL Per Worker GDP, 1960 x 10 4

18 Figure 1.c: Growth Rate Versus Initial Per Capita GDP Growth Rate of Per Capita GDP, KOR HKG OAN SGP JPN SYC CYP LSO THA PRT GRC ESP MYS IDN ITA JOR EGY TUR SYRIRL ISR AUT FRA FIN BEL CHN YUG BOL ECU PRY BRA GER LUX CMR GIN NAM TUN COL DZA ISL NOR NLD CAN GAB PNG MUS MEX GBR BGD CSK PAN DNK CHE ZAF FJI NGA GTM CIV HND LKA DOM SWEAUS GNBPHL COM CRI SLV CHL MAR URY IND COG CIV JAM NZL CAF ZMB SEN ZWE PER IRN KEN TTO GMB BEN TGOGHA MOZ TCD MLI RWANIC VEN UGA MRT MLI MDG CAF MWI BFA BDI BFALSO MOZ PAK GUY USA Per Worker GDP, 1960 x 10 4

19

20 Conditional Convergence Countries with same g but potentially differing s, n, d, α. Countries have different balanced growth path. Countries that start further below their balanced growth path (countries that are poor relative to their BGP) should grow faster than rich countries (relative to their BGP). This is called conditional convergence. Data for full sample lend support to conditional convergence. Industrialized countries as of 1885: similar savings rates, population growth rates. US States: Strong evidence of convergence across states. Again similar technology, saving, population. Baro and Sala-i-Martin (1992)

21

22

23 Conclusion: The Solow Growth Model Offers a simple and elegant account of a number of growth facts. Leaves unexplained factors that make countries leave (or not attain) their BGP. Leaves unexplained why certain countries have higher s, n than others. Leaves unexplained technological progress, the source of growth.

24 Endogenous Growth Models Now briefly discuss some models which try to explain sources of growth endogenous growth models. An active research topic in late 1980s-1990s, not as much lately. Romer (1986, 1990), Lucas (1988) most influential: models of R & D, human capital. More recently Acemoglu et al: role of institutions in growth.

25 What s in TFP? Institutions & Geography Aside from innovations (which we ll turn to next), infrastructure, institutions, and geography are also important. Interesting comparison: experiences of former colonies. Acemoglu, Johnson and Robinson (2001). Small initial differences in income. Differences in settlers mortality influenced whether colony was run for extraction or whether colonists developed institutions. Those colonies where institutions took hold developed faster. Large differences in outcomes still today!

26

27 What s in TFP? Ideas and Human Capital Relatively new branch of economic theory: endogenous growth theory seeks to explain how technical change happens. Simple endogenous growth model (AK model): aggregate production function Y = AK. (Ignore labor and population growth, could think of this as per capita production.) Not subject to diminishing returns: MPK is constant F K = Y K = A. Idea: Aggregate capital K captures not just increases in physical capital but changes in the makeup of that capital.

28 Human Capital as a Source of Growth Human capital: knowledge, skills, and training of individuals. As economies become richer they invest in human capital in the same proportion, offsetting the diminishing marginal product of physical capital alone. Explicitly: production depends on human capital H, physical capital K: Y = zh θ K 1 θ Say H = hk, so that human capital is constant fraction of physical, then letting A = zh θ : [ Y = z(hk) θ K 1 θ = zh θ] K = AK

29 Other Interpretations Research and development programs are part of capital investment. They increase the stock of knowledge, which offsets diminishing marginal products of capital accumulation. Learning by doing: as economies produce more they learn better how to produce.

30 Implications of the Endogenous Growth Model Again savings constant fraction s of output. So: K = sak dk Since Y = AK, Ẏ Y = K K = sa d Growth of output depends on the saving rate, even in the long run. No steady state. Higher savings more human capital, R&D, learning by doing. So higher savings leads to productivity improvements and higher growth. Important implication, some evidence that measured TFP does depend on savings, human capital.

31 TFP growth rate, (Labor share=0.65, no returns to education) IDN IRL PRT MUS TUN CHL BWACOG MYS ZWE ITA ISR IND KEN COL URY BRA BEL SWESP NLD AUS GRC AUT DNK PAK PRY MAR USAGBR FRA ECU EGY GHA GTMLKA UGA BGD DOM SYRTUR CAN TTO ZAF DZA PAN MLI PHL ARG PER JAMEX BFA BOL NZL CHE ETH SLV CIV NPL HND MWI VEN SEN JOR CRI RWA BDI TZA BENCMR PNG MDG CAF MRT TGO NGA NER ZMB AGO MOZ ZAR NIC HKG KOR THA JPN FIN NOR Saving rate, Figure 1: Relation of TFP growth to saving rate SGP TFP growth rate, (Labor share=0.65, no returns to education) THA IDN PRT NOR TUN MUS ZWE BWA ITAMYS CHL COG JPNISR KEN BRAIND COL URYGRCAUT SWE PAK MAR PRY ECU GBR FRA ESP BEL FIN AUSDNK NLD USA GTM UGA BGD GHA DOM TUR LKA SYR EGY CAN DZA PAN ZAF ARGMEX PER TTO BFA MLI PHL JAM MWI CIV NPL HND BOL CHE NZL BDI TZA ETH SLV VEN SEN CRI RWA BEN PNG CMR MDG CAF MRT NGA NER ZMB TGO AGO MOZ ZAR NIC Human capital investment rate, Figure 2: Relation of TFP growth to schooling rate HKG SGP KOR IRL JOR 45

32 TFP growth rate, (Labor share=0.65, no returns to education) PRT NOR IRL THA IDN ITA JPN MUS CHL COG ISR TUN MYS ZWE BWA BEL FIN URY AUT GRC SWE DNK GBR FRA ESPNLD AUS IND BRA COL KEN USA MAR PAK ECU PRY CAN LKA EGY ARG CHE NZL TTO BGD GHA GTM TUR PAN DOM SYR JAM ZAF UGA PER BFA MLI PHL MEX DZA BOL NPL MWI HND SLV VENCIV ETH SEN CRI BDI TZA RWA PNG CMRBEN MDG CAF MRT NGA TGO AGO NER ZMB MOZ HKG KOR Labor force growth rate, Figure 3: Relation of TFP growth to labor force growth rate SGP ZAR NIC JOR TFP growth rate, (Labor share=0.65, 7% return to education) IRL IDN COG PRT MUSCHL ITA IND KEN TUN MYS COL URY BWA BRA BEL ZWEAUS DNK AUT ISR GTMLKA PAK PRY USAGBR SWESPGRC NLD FRA ECU UGA GHA BGDDOM CAN MLI EGY BOL TTO ZAF SYRTUR DZA ARGJAM PAN MWIPHL PERNZL MEX CHE SEN SLV NPL HND TZA CRI VEN RWA BENCMR PNG JOR MOZ CAF TGO NER ZAR NIC ZMB HKG KOR THA Saving rate, Figure 4: Relation of TFP growth to saving rate JPN FIN NOR SGP 46

Figure 1.1 The Parade of World Income. Copyright 2005 Pearson Addison-Wesley. All rights reserved. 1-1

Figure 1.1 The Parade of World Income. Copyright 2005 Pearson Addison-Wesley. All rights reserved. 1-1 Figure 1.1 The Parade of World Income Copyright 2005 Pearson Addison-Wesley. All rights reserved. 1-1 Copyright 2005 Pearson Addison-Wesley. All rights reserved. 1-2 Growth and Development: The Questions

More information

Addressing The Marketing Problem of the Social Market Economy

Addressing The Marketing Problem of the Social Market Economy Addressing The Marketing Problem of the Social Prepared for: KAS-Conference on 60 Years of Social Market Economy Sankt Augustin, November 30, 2009 Marcus Marktanner, American University of Beirut Outline

More information

Lecture 21: Institutions II

Lecture 21: Institutions II Lecture 21: Institutions II Dave Donaldson and Esther Duflo 14.73 Challenges of World Poverty Institutions II: Plan for the lecture Discussion of assigned reading (Acemoglu, Johnson and Robinson) Causes

More information

Macroeconomics II. Growth

Macroeconomics II. Growth Macroeconomics II Growth Growth Possibilities We previously referred to the aggregate production function Y = A K α L 1- α. The growth rate of real GDP, Y, is generated by the contributions of A, K and

More information

Economic Growth: the role of institutions

Economic Growth: the role of institutions ECON 184 Economic Growth: the role of institutions ECON 184: Institutions and Growth January 26, 2010 1 Contents 1 Institutions and growth: initial analysis 3 2 How can institutions affect economic growth?

More information

Finance, Growth & Opportunity. Implications for policy

Finance, Growth & Opportunity. Implications for policy Finance, Growth & Opportunity Implications for policy Today, I will make three points 1) Finance matters for human welfare beyond crises. 2) Financial innovation is associated with arguably necessary for

More information

In Defense of Wall Street - Does Finance Cause Creative Destruction?

In Defense of Wall Street - Does Finance Cause Creative Destruction? In Defense of Wall Street The Social Productivity of the Financial System Finance is powerful Mobilizes Researches and allocates Monitors and exerts corporate control Provides risk diversification and

More information

The new gold standard? Empirically situating the TPP in the investment treaty universe

The new gold standard? Empirically situating the TPP in the investment treaty universe Graduate Institute of International and Development Studies Center for Trade and Economic Integration Working Paper Series Working Paper N IHEIDCTEI2015-08 The new gold standard? Empirically situating

More information

Financial services and economic development

Financial services and economic development GDP per capita growth 03/11/2014 Financial services and economic development Thorsten Beck Finance why do we care? 0.04 BWA 0.02 0.00-0.02 COG SLE ALB GAB IND KOR TUR SGP MUS SDN MOZ IRLLUX IDN MAR EGY

More information

Accounting For Cross-Country Income Di erences

Accounting For Cross-Country Income Di erences Accounting For Cross-Country Income Di erences January 2011 () Aggregation January 2011 1 / 10 Standard Primal Growth Accounting Aggregate production possibilities frontier: where Change in output is )

More information

Ken Jackson. January 31st, 2013

Ken Jackson. January 31st, 2013 Wilfrid Laurier University January 31st, 2013 Recap of the technology models Do the models match historical data? growth accounting Estimating technology change through history A revised model of technology

More information

Addressing institutional issues in the Poverty Reduction Strategy Paper process

Addressing institutional issues in the Poverty Reduction Strategy Paper process SESSION 1 Addressing institutional issues in the Poverty Reduction Strategy Paper process Scoping notes, detailed diagnostics, and participatory processes Public Sector Reform and Capacity Building Unit

More information

Export Survival and Comparative Advantage

Export Survival and Comparative Advantage Export Survival and Comparative Advantage (Work in progress) Regional Seminar on Export Diversification, October 27-28, 2010 Bolormaa Tumurchudur, UNCTAD Miho Shirotori, UNCTAD Alessandro Nicita, UNCTAD

More information

A new metrics for the Economic Complexity of countries and products

A new metrics for the Economic Complexity of countries and products A new metrics for the Economic Complexity of countries and products Andrea Tacchella Dept. of Physics, La Sapienza - University of Rome Istituto dei Sistemi Complessi, CNR Roma CRISISLAB ANALYTICS FOR

More information

Economic Growth: The Neo-classical & Endogenous Story

Economic Growth: The Neo-classical & Endogenous Story Density of countries Economic Growth: The Neo-classical & Endogenous Story EC307 ECONOMIC DEVELOPMENT 1960 Dr. Kumar Aniet University of Cambridge & LSE Summer School Lecture 4 1980 2000 created on July

More information

Economic Complexity and the Wealth of Nations

Economic Complexity and the Wealth of Nations Economic Complexity and the Wealth of Nations Cesar A. Hidalgo ABC Career Development Professor MIT Media Lab Faculty Associate, Center for International Development Harvard University EARTH WIND WATER

More information

Today s tips for the Country Buy Report

Today s tips for the Country Buy Report High level outline Today s tips for the Country Buy Report Stephen Malpezzi Introduction Overview of the country and economy Basic indicators (GDP, employment, etc.) Key institutions, the setting How does

More information

Infrastructure and Economic. Norman V. Loayza, World ldbank Rei Odawara, World Bank

Infrastructure and Economic. Norman V. Loayza, World ldbank Rei Odawara, World Bank Infrastructure and Economic Growth thin Egypt Norman V. Loayza, World ldbank Rei Odawara, World Bank Motivation Questions How does Egypt compare internationally regarding public infrastructure? Is Egypt

More information

Overview of Growth Research in the Past Two Decades

Overview of Growth Research in the Past Two Decades Overview of Growth Research in the Past Two Decades by Pete Klenow Stanford University and NBER September 21, 2010 Early Growth Research 1950s Solow (1956) 1960s Nelson and Phelps (1966) 1970s Dark Ages

More information

The Macroeconomic Implications of Financial Globalization

The Macroeconomic Implications of Financial Globalization The Macroeconomic Implications of Financial Globalization Eswar Prasad, IMF Research Department November 10, 2006 The views expressed in this paper are those of the author(s) ) only, and the presence of

More information

Lecture 9: Institutions, Geography and Culture. Based on Acemoglu s L. Robbins lectures

Lecture 9: Institutions, Geography and Culture. Based on Acemoglu s L. Robbins lectures Lecture 9: Institutions, Geography and Culture Based on Acemoglu s L. Robbins lectures 1 The Wealth of Nations Vast differences in prosperity across countries today. Income per capita in sub-saharan Africa

More information

China: How to maintain balanced growth? Ricardo Hausmann Kennedy School of Government Harvard University

China: How to maintain balanced growth? Ricardo Hausmann Kennedy School of Government Harvard University China: How to maintain balanced growth? Ricardo Hausmann Kennedy School of Government Harvard University China s growth process An unprecedented miracle China has been the fastest growing country in the

More information

Building Capacity in PFM

Building Capacity in PFM Building Capacity in PFM Measuring economic governance in the context of national development planning LAMIA MOUBAYED BISSAT Beirut, Lebanon, 13 June 2014 The Institut des Finances Basil Fuleihan 1996

More information

THE QUALITY OF GOVERNMENT CA FOSCARI INTERNATIONAL LECTURE

THE QUALITY OF GOVERNMENT CA FOSCARI INTERNATIONAL LECTURE THE QUALITY OF GOVERNMENT CA FOSCARI INTERNATIONAL LECTURE Andrei Shleifer December 12, 2012 1 Richer countries almost always have better governments Less corrupt More efficient Quality of government improves

More information

Natural Resources and Development in the Middle East and North Africa: An Alternative Perspective

Natural Resources and Development in the Middle East and North Africa: An Alternative Perspective Natural Resources and Development in the Middle East and North Africa: An Alternative Perspective Daniel Lederman and Mustapha K. Nabli The World Bank Presentation at the Workshop on Natural Resources

More information

Political Economy of Growth

Political Economy of Growth 1 Political Economy of Growth Daron Acemoglu Department of Economics, MIT Milan, DEFAP June 11, 2007 The Wealth of Nations Vast differences in prosperity across countries today. Income per capita in sub-saharan

More information

Deep Roots of Comparative Development

Deep Roots of Comparative Development Deep Roots of Comparative Development Oded Galor AEA Continuing Education Program Lecture III - AEA 2014 Oded Galor Roots of Comparative Development Lecture III - AEA 2014 1 / 41 Deep Roots of Comparative

More information

Bringing Up Incentives: A Look at the Determinants of Poverty. Alice Sheehan

Bringing Up Incentives: A Look at the Determinants of Poverty. Alice Sheehan Bringing Up Incentives: A Look at the Determinants of Poverty Alice Sheehan Outline presentation What s going on out there? Growth, Human Development indicators, Poverty rates, etc. A look at determinants

More information

The Effects of Infrastructure Development on Growth and Income Distribution

The Effects of Infrastructure Development on Growth and Income Distribution The Effects of Infrastructure Development on Growth and Income Distribution César Calderón Luis Servén (Central Bank of Chile) (The World Bank) ALIDE - The World Bank - Banco BICE Reunión Latinoamericana

More information

The Fall of the Final Mercantilism

The Fall of the Final Mercantilism The Fall of the Final Mercantilism Labour Mobility in the Caribbean and the World, from Arthur Lewis to the 21 st Century Eastern Caribbean Central Bank Michael Clemens November 3, 2010 1 2 Migration

More information

Does Absolute Latitude Explain Underdevelopment?

Does Absolute Latitude Explain Underdevelopment? AREC 345: Global Poverty and Economic Development Lecture 4 Professor: Pamela Jakiela Department of Agricultural and Resource Economics University of Maryland, College Park Does Absolute Latitude Explain

More information

A Pragmatic Approach to Capital Account Liberalization. Eswar Prasad Cornell University

A Pragmatic Approach to Capital Account Liberalization. Eswar Prasad Cornell University A Pragmatic Approach to Capital Account Liberalization Eswar Prasad Cornell University Presentation partly based on my joint work with: Ayhan Kose, Kenneth Rogoff, Shang-Jin Wei (2003, 2006) Raghuram Rajan

More information

ECON 260 Theories of Economic Development. Instructor: Jorge Agüero. Fall 2008. Lecture 1 September 29, 2008 1

ECON 260 Theories of Economic Development. Instructor: Jorge Agüero. Fall 2008. Lecture 1 September 29, 2008 1 ECON 260 Theories of Economic Development. Instructor: Jorge Agüero. Fall 2008. Lecture 1 September 29, 2008 1 General information Time and location: TR 2:10-3:30 p.m. SPR 3123 Office hours: T 10am-11am,

More information

Fear of flying: Policy stances in a troubled world economy

Fear of flying: Policy stances in a troubled world economy Fear of flying: Policy stances in a troubled world economy UNCTAD G-24 Technical Meeting Luxor, 10-11 March 2014 Session 1 Global Economy A weakening economic performance reflects inability to address

More information

The Marginal Product of Capital. Francesco Caselli. Discussion by

The Marginal Product of Capital. Francesco Caselli. Discussion by 7 TH JACQUES POLAK ANNUAL RESEARCH CONFERENCE NOVEMBER 9-10, 2006 The Marginal Product of Capital Francesco Caselli Discussion by Chang-Tai Hsieh University of California, Berkeley The views expressed

More information

Estimating Global Migration Flow Tables Using Place of Birth Data

Estimating Global Migration Flow Tables Using Place of Birth Data Estimating Global Migration Flow Tables Using Place of Birth Data Guy J. Abel Wittgenstein Centre (IIASA, VID/ÖAW, WU) Vienna Institute of Demography/Austrian Academy of Sciences 1 Introduction International

More information

DEPENDENT ELITES IN POST- SOCIALISM: ARE LAND-BASED POST- COLONIAL SYSTEMS SO DIFFERENT FROM THE TRANSCONTINENTAL ONES? by Pal TAMAS [Institute of

DEPENDENT ELITES IN POST- SOCIALISM: ARE LAND-BASED POST- COLONIAL SYSTEMS SO DIFFERENT FROM THE TRANSCONTINENTAL ONES? by Pal TAMAS [Institute of DEPENDENT ELITES IN POST- SOCIALISM: ARE LAND-BASED POST- COLONIAL SYSTEMS SO DIFFERENT FROM THE TRANSCONTINENTAL ONES? by Pal TAMAS [Institute of Sociology, HAS Budapest] STRUCTURE OF THE PAPER 1. STATE

More information

Trade and International Integration: A Developing Program of Research

Trade and International Integration: A Developing Program of Research Trade and International Integration: A Developing Program of Research World Bank Development Economics Research Group Geneva, June 2013 Three areas of focus I. Implications of the changing patterns of

More information

Trade Policy Restrictiveness in Transportation Services

Trade Policy Restrictiveness in Transportation Services Trade Policy Restrictiveness in Transportation Services Ingo Borchert, Batshur Gootiiz and Aaditya Mattoo Development Research Group Trade and International Integration, The World Bank OECD Expert Meeting

More information

The contribution of trade in financial services to economic growth and development. Thorsten Beck

The contribution of trade in financial services to economic growth and development. Thorsten Beck The contribution of trade in financial services to economic growth and development Thorsten Beck Finance why do we care? 0.04 BWA GDP per capita growth 0.02 0.00-0.02 COG SLE ALB GAB IND KOR TUR SGP MUS

More information

Governance, Rule of Law and Transparency Matters: BRICs in Global Perspective

Governance, Rule of Law and Transparency Matters: BRICs in Global Perspective Governance, Rule of Law and Transparency Matters: BRICs in Global Perspective Daniel Kaufmann * Senior Fellow, Brookings Institution http://www.brookings.edu/experts/kaufmannd.aspx Panel on Transparency

More information

Non-market strategy under weak institutions

Non-market strategy under weak institutions Lectures 5-6 Non-market strategy under weak institutions 1 Outline 1. Does weakness of institutions matter for business and economic performance? 2. Which institutions matter most? 3. Why institutions

More information

Institutional Change and Growth-Enabling Governance Capabilities

Institutional Change and Growth-Enabling Governance Capabilities Institutional Change and Growth-Enabling Governance Capabilities Nicolas Meisel Strategy and Research Dept - French Development Agency (AFD) Jacques Ould Aoudia Treasury and Economic Policy Directorate

More information

Rethinking the Wealth of Nations. Daron Acemoglu, MIT FEEM Lecture, December 14, 2009.

Rethinking the Wealth of Nations. Daron Acemoglu, MIT FEEM Lecture, December 14, 2009. Rethinking the Wealth of Nations Daron Acemoglu, MIT FEEM Lecture, December 14, 2009. 1 The Failure of Nations Vast differences in prosperity across countries today. Income per capita in sub-saharan Africa

More information

Life-cycle Human Capital Accumulation Across Countries: Lessons From U.S. Immigrants

Life-cycle Human Capital Accumulation Across Countries: Lessons From U.S. Immigrants Life-cycle Human Capital Accumulation Across Countries: Lessons From U.S. Immigrants David Lagakos, UCSD and NBER Benjamin Moll, Princeton and NBER Tommaso Porzio, Yale Nancy Qian, Yale and NBER Todd Schoellman,

More information

Technology Choice. Francesco Caselli. Summer School 2005

Technology Choice. Francesco Caselli. Summer School 2005 Technology Choice Francesco Caselli Summer School 2005 1 Motivation All of the evidence and all of the models we have studied so far assume that cross-country technology differences are factor-neutral.

More information

Subjective Well-Being, Income, Economic Development and Growth

Subjective Well-Being, Income, Economic Development and Growth Subjective Well-Being, Income, Economic Development and Growth Dan Sacks, Betsey Stevenson and Justin Wolfers Wharton School, University of Pennsylvania and NBER Annual Bank Conference on Development Economics--Stockholm,

More information

Incen%ves The Good, the Bad and the Ugly

Incen%ves The Good, the Bad and the Ugly Incen%ves The Good, the Bad and the Ugly Vale Columbia Center Interna%onal Investment Conference New York, Nov 13-14, 2013 Sebas%an James The World Bank Group 1 Prevalence of Tax Incen%ves around the Number

More information

2006/SOM1/ACT/WKSP/007a Recasting Governance for the XXI Century - Presentation

2006/SOM1/ACT/WKSP/007a Recasting Governance for the XXI Century - Presentation 2006/SOM1/ACT/WKSP/007a Recasting Governance for the XXI Century - Presentation Submitted by: Miguel Schloss, Managing Partner DamConsult Ltd. APEC Workshop on Anti-Corruption Measures for the Development

More information

Institute for Development Policy and Management (IDPM)

Institute for Development Policy and Management (IDPM) Institute for Development Policy and Management (IDPM) Development Economics and Public Policy Working Paper Series WP No. 33/212 Published by: Development Economics and Public Policy Cluster, Institute

More information

Infrastructure and Economic Growth in Egypt

Infrastructure and Economic Growth in Egypt Public Disclosure Authorized Policy Research Working Paper 5177 WPS5177 Public Disclosure Authorized Public Disclosure Authorized Infrastructure and Economic Growth in Egypt Norman V. Loayza Rei Odawara

More information

NGO PERSPECTIVE: FROM WORDS TO DEEDS

NGO PERSPECTIVE: FROM WORDS TO DEEDS MMSD & IIED Managing Mineral Wealth NGO PERSPECTIVE: FROM WORDS TO DEEDS Miguel Schloss Executive Director Transparency International Issues Policy distortions Institutional incentives Governance Implications

More information

Econ 1340: World Economic History

Econ 1340: World Economic History Econ 1340: World Economic History Lecture 16 Camilo Gracía-Jimeno University of Pennsylvania April 4, 2011 Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, 2011

More information

Subjective Well Being, Income, Economic Development and Growth

Subjective Well Being, Income, Economic Development and Growth Subjective Well Being, Income, Economic Development and Growth Dan Sacks, Betsey Stevenson and Justin Wolfers Wharton School, University of Pennsylvania and NBER CSLS ICP Conference on Happiness December

More information

How To Account For Differences In Intermediate Input To Output Ratios Across Countries

How To Account For Differences In Intermediate Input To Output Ratios Across Countries Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis Diego Restuccia University of Toronto Dennis Tao Yang Virginia Polytechnic Institute Xiaodong Zhu University of Toronto March

More information

Does Export Concentration Cause Volatility?

Does Export Concentration Cause Volatility? Does Export Concentration Cause Volatility? Christian Busch 14. Januar 2010 Overview Countries with undiversified export structure are plausibly more vulnerable to external shocks. But difficult to evaluate

More information

Human Resources for Health Why we need to act now

Human Resources for Health Why we need to act now Human Resources for Health Why we need to act now Progress towards the MDGs, particularly in Africa is slow, or even stagnating. Poor people cannot access basic services for want of doctors, nurses and

More information

Measuring the Pollution Terms of Trade with Technique Effects

Measuring the Pollution Terms of Trade with Technique Effects Measuring the Pollution Terms of Trade with Technique Effects Jean-Marie Grether, University of Neuchâtel Nicole Mathys, Swiss Federal Office of Energy and University of Neuchâtel Conference on the International

More information

Movement and development. Australian National University Jan. 17, 2013 Michael Clemens

Movement and development. Australian National University Jan. 17, 2013 Michael Clemens Movement and development Australian National University Jan. 17, 2013 Michael Clemens ? 60% Benefits Little Haiti Cap-Haïtien Gibson and McKenzie 2010 Tongan seasonal workers in NZ NZ$1,400/family

More information

Human Rights and Governance: The Empirical Challenge. Daniel Kaufmann World Bank Institute. www.worldbank.org/wbi/governance/

Human Rights and Governance: The Empirical Challenge. Daniel Kaufmann World Bank Institute. www.worldbank.org/wbi/governance/ Human Rights and Governance: The Empirical Challenge Daniel Kaufmann World Bank Institute www.worldbank.org/wbi/governance/ Presentation at Human Rights and Development: Towards Mutual Reinforcement Conference,

More information

Geography and Economic Transition

Geography and Economic Transition Global Spatial Analysis at the Grid Cell Level Mesbah Motamed Raymond Florax Will Masters Department of Agricultural Economics Purdue University March 2009 Urbanization at the grid cell level Growth regimes

More information

Informality in Latin America and the Caribbean

Informality in Latin America and the Caribbean WPS4888 Policy Research Working Paper 4888 Informality in Latin America and the Caribbean Norman V. Loayza Luis Servén Naotaka Sugawara The World Bank Development Research Group Macroeconomics and Growth

More information

Growing Together with Growth Polarization and Income Inequality

Growing Together with Growth Polarization and Income Inequality Growing Together with Growth Polarization and Income Inequality Sudip Ranjan Basu, Ph.D. Economist, United Nations ESCAP UN DESA Expert Group Meeting on the World Economy (LINK Project) United Nations

More information

Tripartite Agreements for MEPC.2/Circ. Lists 1, 3, 4 received by IMO following issuance of MEPC.2/Circ.20

Tripartite Agreements for MEPC.2/Circ. Lists 1, 3, 4 received by IMO following issuance of MEPC.2/Circ.20 The following is a list of tripartite agreements reported to IMO during the period between the issuance of the annual MEPC.2/Circular, disseminated in December of each year. Any countries wishing to join

More information

Relative Prices and Sectoral Productivity

Relative Prices and Sectoral Productivity Relative Prices and Sectoral Productivity Margarida Duarte University of Toronto Diego Restuccia University of Toronto August 2012 Abstract The relative price of services rises with development. A standard

More information

The geography of development within countries

The geography of development within countries The geography of development within countries J. Vernon Henderson Brown University & NBER June 2012 GDN 13TH ANNUAL GLOBAL DEVELOPMENT CONFERENCE Urbanization and Development: Delving Deeper into the Nexus

More information

The Role of Trade in Structural Transformation

The Role of Trade in Structural Transformation 1 The Role of Trade in Structural Transformation Marc Teignier UNIVERSIDAD DE ALICANTE European Summer Symposium in International Macroeconomics 23 May 2012, Tarragona Question Contributions Road Map Motivation

More information

Informality in Latin America and the Caribbean

Informality in Latin America and the Caribbean Public Disclosure Authorized Policy Research Working Paper 4888 WPS4888 Public Disclosure Authorized Public Disclosure Authorized Informality in Latin America and the Caribbean Norman V. Loayza Luis Servén

More information

Financial Liberalization and Capital Flows: Facts

Financial Liberalization and Capital Flows: Facts Financial Liberalization and Capital Flows: Facts Alberto Martin CREI, Universitat Pompeu Fabra and Barcelona GSE July 2014 The rise of nancial globalization Since the late 1970s Dramatic increase in nancial

More information

Rodolfo Debenedetti Lecture

Rodolfo Debenedetti Lecture Rodolfo Debenedetti Lecture Andrei Shleifer March 2005 Legal Origin Distribution Legal Origins = English = French = German = Scandinavian = Socialist Institution Procedural Formalism Outcomes Time to evict

More information

Tripartite Agreements for MEPC.2/Circ. Lists 1, 3, 4 received by IMO following issuance of MEPC.2/Circ.21

Tripartite Agreements for MEPC.2/Circ. Lists 1, 3, 4 received by IMO following issuance of MEPC.2/Circ.21 The following is a list of tripartite agreements reported to IMO during the period between the issuance of the annual MEPC.2/Circular, disseminated in December of each year. Any countries wishing to join

More information

Political Economy of Development and Underdevelopment

Political Economy of Development and Underdevelopment Political Economy of Development and Underdevelopment Daron Acemoglu Department of Economics Massachusetts Institute of Technology October 10, 2005 The State of the World Economy Vast differences in prosperity

More information

Diversification versus Polarization: Role of industrial policy in Asia and the Pacific

Diversification versus Polarization: Role of industrial policy in Asia and the Pacific TOWARDS A RETURN OF INDUSTRIAL POLICY? ARTNeT SYMPOSIUM 25-26 JULY 211 ESCAP, BANGKOK Diversification versus Polarization: Role of industrial policy in Asia and the Pacific Sudip Ranjan Basu* International

More information

How To Understand The World'S Governance

How To Understand The World'S Governance Metrics Matters: Measures of Governance and Security and the Business Perspective An initial empirical exploration Daniel Kaufmann, World Bank Institute www.worldbank.org/wbi/governance For presentation

More information

EC 2725 April 2009. Law and Finance. Effi Benmelech Harvard & NBER

EC 2725 April 2009. Law and Finance. Effi Benmelech Harvard & NBER EC 2725 April 2009 Law and Finance Effi Benmelech Harvard & NBER Broad Picture A market economy is not only laissez faire but it also requires a set of institutions that allow markets to work their magic.

More information

TRADE WATCH DATA JANUARY T RVSFRRTVL

TRADE WATCH DATA JANUARY T RVSFRRTVL Public Disclosure Authorized TRADE WATCH DATA JANUARY T RVSFRRTVL Public Disclosure Authorized A C F D H T W B DECRG Public Disclosure Authorized Public Disclosure Authorized *TRADE WATCH is a monthly

More information

The Shift to Government Banking:

The Shift to Government Banking: The Shift to Government Banking: Risks for the Netherlands and other Developed Countries Prof. Florencio Lopez de Silanes EDHEC Business School, NBER and DSF April 28, 2011 Amsterdam Outline I. The Policy

More information

Specialization Patterns in International Trade

Specialization Patterns in International Trade Specialization Patterns in International Trade Walter Steingress November 16, 2015 Abstract The pattern of specialization is key to understanding how trade affects the production structure of an economy.

More information

Trends in global income inequality and their political implications

Trends in global income inequality and their political implications Trends in global income inequality and their political implications LIS Center; Graduate School City University of New York Talk at the Stockholm School of Economics, September 1, 2014 A. National inequalities

More information

Gender Inequality, Income, and Growth: Are Good Times Good for Women?

Gender Inequality, Income, and Growth: Are Good Times Good for Women? POLICY RESEARCH REPORT ON GENDER AND DEVELOPMENT Working Paper Series, No. 1 Gender Inequality, Income, and Growth: Are Good Times Good for Women? David Dollar Roberta Gatti Gender differentials in education

More information

Evaluation with stylized facts

Evaluation with stylized facts Evaluation with stylized facts AMPERE Subgroup on IAM Validation Valeria Jana Schwanitz Potsdam Institute for Climate Impact Research 27. Mai 2013 Content Fundamental laws and stylized facts Systematic

More information

A Survey of Securities Laws and Enforcement

A Survey of Securities Laws and Enforcement A Survey of Securities Laws and Enforcement Preliminary Draft By Florencio Lopez-de-Silanes YALE University and NBER October 2003 *I am indebted to Patricio Amador, Jose Caballero and Manuel Garcia-Huitron

More information

Fertility Convergence

Fertility Convergence Fertility Convergence Tiloka De-Silva a Silvana Tenreyro a,b a London School of Economics, CfM; b CEP, CEPR July 2015 Abstract A vast literature has sought to explain large cross-country differences in

More information

How To Increase Crop Output

How To Increase Crop Output Adaptation to land constraints: Is Africa different? Derek Headey International Food Policy Research Institute (IFPRI) Thom Jayne Michigan State University (MSU) 1 1. Introduction Some 215 years ago, Malthus

More information

The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded

The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded Andrea F. Presbitero Alberto Zazzaro 1 Università Politecnica delle Marche 2 Money and Finance Research group (MoFiR) Real and

More information

14.452 Economic Growth: Lecture 4, The Solow Growth Model and the Data

14.452 Economic Growth: Lecture 4, The Solow Growth Model and the Data 14.452 Economic Growth: Lecture 4, The Solow Growth Model and the Data Daron Acemoglu MIT November 8, 2011. Daron Acemoglu (MIT) Economic Growth Lecture 4 November 8, 2011. 1 / 52 Mapping the Model to

More information

Financial Integration and Deepening: Are Poor Countries Lagging?

Financial Integration and Deepening: Are Poor Countries Lagging? Financial Integration and Deepening: Are Poor Countries Lagging? Mark M. Spiegel Vice President Economic Research Federal Reserve Bank of San Francisco Prepared for conference on Capital Flows, Monetary

More information

Are «Good Governance» reforms a priority? Conceptual, measurement, and policy issues

Are «Good Governance» reforms a priority? Conceptual, measurement, and policy issues SOAS & Mo Ibrahim Residential School on Governance in Africa Are «Good Governance» reforms a priority? Conceptual, measurement, and policy issues Nicolas Meisel (meiseln@afd.fr) Research Department - French

More information

The Role of Women in Society: from Preindustrial to Modern Times

The Role of Women in Society: from Preindustrial to Modern Times CESifo Economic Studies Advance Access published May 22, 2014 CESifo Economic Studies, 2014, doi:10.1093/cesifo/ifu019 The Role of Women in Society: from Preindustrial to Modern Times Paola Giuliano UCLA

More information

International Investment Patterns. Philip R. Lane WBI Seminar, Paris, April 2006

International Investment Patterns. Philip R. Lane WBI Seminar, Paris, April 2006 International Investment Patterns Philip R. Lane WBI Seminar, Paris, April 2006 Introduction What determines aggregate capital inflows and outflows? What determines bilateral patterns in international

More information

Online Appendix to The Missing Food Problem: Trade, Agriculture, and International Income Differences

Online Appendix to The Missing Food Problem: Trade, Agriculture, and International Income Differences Online Appendix to The Missing Food Problem: Trade, Agriculture, and International Income Differences Trevor Tombe, Uversity of Calgary Contents 1 Proof of Propositions 2 2 Data and Sample of Countries

More information

Globalization, Technology and Inequality

Globalization, Technology and Inequality Globalization, Technology and nequality Lecture 4: Trade, O shoring and nequality Gino Gancia July 5, 2012 Gino Gancia () Lecture 4 July 5, 2012 1 / 26 Trends in Wage nequality within-country wage inequality

More information

BUILDING A DATASET FOR BILATERAL MARITIME CONNECTIVITY. Marco Fugazza Jan Hoffmann Rado Razafinombana

BUILDING A DATASET FOR BILATERAL MARITIME CONNECTIVITY. Marco Fugazza Jan Hoffmann Rado Razafinombana U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T POLICY ISSUES IN INTERNATIONAL TRADE AND COMMODITIES STUDY SERIES No. BUILDING A DATASET FOR BILATERAL MARITIME CONNECTIVITY

More information

Industrial Policy, Capabilities, and Growth: Where does the Future of Singapore lie? Jesus Felipe Asian Development Bank

Industrial Policy, Capabilities, and Growth: Where does the Future of Singapore lie? Jesus Felipe Asian Development Bank Industrial Policy, Capabilities, and Growth: Where does the Future of Singapore lie? Jesus Felipe Asian Development Bank Purpose of the talk Understand the economic challenges that Singapore faces Discuss

More information

Subjective Well Being and Income: Is There Any Evidence of Satiation? *

Subjective Well Being and Income: Is There Any Evidence of Satiation? * Subjective Well Being and Income: Is There Any Evidence of Satiation? * Betsey Stevenson The Gerald R. Ford School of Public Policy, University of Michigan & CESifo and NBER betseys@umich.edu www.nber.org/~bstevens

More information

The distribution of household financial contributions to the health system: A look outside Latin America and the Caribbean

The distribution of household financial contributions to the health system: A look outside Latin America and the Caribbean The distribution of household financial contributions to the health system: A look outside Latin America and the Caribbean Priyanka Saksena and Ke Xu 3 November, 2008 Santiago 1 The distribution of household

More information

Design of efficient redistributive fiscal policy

Design of efficient redistributive fiscal policy Fiscal Policy and Income Inequality Sanjeev Gupta Deputy Director Fiscal Affairs Department, IMF IMF-Hitotsubashi University Workshop March 12, Tokyo Structure of the presentation Trends in inequality

More information

First Credit Bureau Conference

First Credit Bureau Conference First Credit Bureau Conference Riga, Latvia 13.1.15 Presentation by: Leora Klapper Lead Economist Development Research Group, World Bank DEVELOPING A NATIONAL CREDIT BUREAU Financial Development What is

More information

Economists have long known that poorly managed exchange rates can. The Real Exchange Rate and Economic Growth. DANI RODRIK Harvard University

Economists have long known that poorly managed exchange rates can. The Real Exchange Rate and Economic Growth. DANI RODRIK Harvard University DANI RODRIK Harvard University The Real Exchange Rate and Economic Growth ABSTRACT I show that undervaluation of the currency (a high real exchange rate) stimulates economic growth. This is true particularly

More information

BUILDING A DATASET FOR BILATERAL MARITIME CONNECTIVITY

BUILDING A DATASET FOR BILATERAL MARITIME CONNECTIVITY Région et Développement n - BUILDING A DATASET FOR BILATERAL MARITIME CONNECTIVITY Marco FUGAZZA *, Jan HOFFMANN *, Rado RAZAFINOMBANA * Abstract - This paper presents a unique database reporting the shortest

More information