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Development Accounting

Author

Listed:
  • Juan Carlos Cordoba
  • Marla Ripoll

Abstract

This paper seeks to device and estimate an accounting framework for international comparison of income that takes into account relevant features of poor countries that are often disregarded in the more traditional single-good, Cobb-Douglas accounting framework. Our framework allows for multiple sectors, namely agriculture, manufacturing and services, as well as the possibility of home production. As poor countries are mainly agricultural and their home production could be potentially large, we consider these two features critical to correctly assess the contribution of factors of production versus TFP. Sectorial production functions can either be Cobb-Douglas with different capital shares, but we also study more general CES production functions. We assess how well a single-good, Cobb-Douglas framework performs compared with ours. We show that the standard framework could significantly downplay the role of factors of production, particularly for poor countries, if factor shares are significantly different across sectors. Given the critical importance of sectorial factor shares and the poor basis for any calibration, especially for poor countries, we proceed to estimate these and other parameters of the model under different identifying assumptions. The estimation exploits sectorial information on outputs and inputs

Suggested Citation

  • Juan Carlos Cordoba & Marla Ripoll, 2004. "Development Accounting," 2004 Meeting Papers 325, Society for Economic Dynamics.
    • Handle: RePEc:red:sed004:325
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    Citations

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    Cited by:

    1. Dietrich Vollrath, 2009. "The dual economy in long-run development," Journal of Economic Growth, Springer, vol. 14(4), pages 287-312, December.
    2. Gollin, Douglas & Parente, Stephen L. & Rogerson, Richard, 2007. "The food problem and the evolution of international income levels," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1230-1255, May.
    3. Vollrath, Dietrich, 2009. "How important are dual economy effects for aggregate productivity?," Journal of Development Economics, Elsevier, vol. 88(2), pages 325-334, March.
    4. Jaime Alonso-Carrera & Xavier Raurich, 2006. "Growth, Sectoral Composition, and the Wealth of Nations," Working Papers 278, Barcelona School of Economics.

    More about this item

    Keywords

    world income distribution; multi-sectorial models;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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