The seminar will be held in the Viksitor Centre at 3 pm.
Ákos Valentinyi
(co-author Berthold Herrendorf)
Abstract
We ask which sectors are mainly responsible for the low aggregate TFPs of poor countries. We argue that existing two–sector studies have not settled this issue because they are not disaggregated enough. Instead of two, we consider four sectors: services, consumption goods, construction, and equipment. Using the Penn World Tables, we find that the TFP differences between rich and poor countries are very large in equipment, large in consumption goods, and small in services. Moreover, we find that the TFP differences in construction tend to be smaller than in equipment, but that there is not enough information to make more precise statements. We show the usefulness of our findings with two applications. First, we use them to evaluate whether bad institutions, bad policies, and low human capital endowments cause the low aggregate TFPs of poor countries. Second, we use them to obtain the results of the existing two–sector studies.