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Intermediate inputs and cross-country productivity differences

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  • Liao, Junmin
  • Wang, Wei

Abstract

Agricultural productivity is important in accounting for international income differences. Both real and nominal intermediate input intensity in agriculture are highly positively correlated with agricultural productivity across countries. However, models with only exogenous price variations are not able to generate any cross-country variation of nominal intermediate input intensity. Therefore, structures that can generate variations in nominal intermediate input intensity are needed in these models. We add a minimum structure to such a model and show that intermediate inputs could account for substantially more cross-country differences in both agricultural and aggregate productivity.

Suggested Citation

  • Liao, Junmin & Wang, Wei, 2019. "Intermediate inputs and cross-country productivity differences," Economics Letters, Elsevier, vol. 176(C), pages 64-67.
    • Handle: RePEc:eee:ecolet:v:176:y:2019:i:c:p:64-67
    DOI: 10.1016/j.econlet.2018.12.038
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    References listed on IDEAS

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    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    2. Diego Comin & Danial Lashkari & Martí Mestieri, 2021. "Structural Change With Long‐Run Income and Price Effects," Econometrica, Econometric Society, vol. 89(1), pages 311-374, January.
    3. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
    4. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "Agricultural Productivity Differences across Countries," American Economic Review, American Economic Association, vol. 104(5), pages 165-170, May.
    5. Liao, Junmin & Wang, Wei, 2018. "Income elasticity and international income differences," Economics Letters, Elsevier, vol. 169(C), pages 68-71.
    6. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    7. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
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    More about this item

    Keywords

    Nominal intermediate input intensity; Real intermediate input intensity; Agricultural productivity differences; Price distortions;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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