TFP differences

62 Pages·1998·2 MB·English

by  Acemoglu, Daron

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working paper
department
economics
of
TFPDIFFERENCES
Daron Acemoglu
Fabrizio Zilibotti
No. 98-15 September 1998
massachusetts
institute of
technology
50 memorial drive
Cambridge, mass. 02139

WORKING PAPER
DEPARTMENT
OF ECONOMICS
TFPDIFFERENCES
Daron Acemoglu
Fabrizio Zilibotti
No. 98-15 September 1998
MASSACHUSETTS
OF
INSTITUTE
TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASS. 02142
MASSACHJSetfSliSTITUTE
OFTECHNOLOGY
LIBRARIES
First Version: August 1998
This Version: September 1998
TFP
Differences*
Daron Acemoglu^ Fabrizio Zilibotti*
Abstract
We
suggest a possible explanation for cross-country differences in total factor produc-
tivity. Many technologies used by LDCs are developed in OECD economies, and as such,
are designed to make optimal use ofthe skills ofthese richer countries' workforces. Due to
differences in the supply of skills, some ofthe tasks performed by skilled workers in richer
economies will be carried out by unskilled workers in the LDCs. Since the technologies in
these tasks are designed to be used by skilled workers, productivity in LDCs will be low.
Even when all countries have equal access to new technologies, this mismatch between
skills and technology can lead to sizable differences in total factor productivity, in the
order of40 to 70 percent ofthe variation we observe in the data. Our theory also suggests
that the trade regime and the degree of intellectual property right enforcement in LDCs
have an important effect on the type of technologies developed in richer economies and
on productivity differences.
JEL
Classification: F43, 014, 034, 047.
Keywords: Development, DirectedTechnical Change, Intellectual PropertyRights, Skills,
Technology, Total Factor Productivity.
WethankChris Mazingoand MarcusSalomonssonforresearchassistance,andJoshAngirst, JonathanTemple, Jaume
Venturafor comments. Acemoglu acknowledges financial support from NSF Grant SBR-9602116.
'Daron Acemoglu: Massachusetts Institute of Technology, NBER and CEPR. Address: Department of
Economics, E52-371, MIT, 50 Memorial Drive, Cambridge, MA 02142-1347. Ph.: (1) 617 253 1927; fax: [phone];
e-mail: [email protected].
^Fabrizio Zilibotti: Institute for International Economic Studies and CEPR. Address: Institute for Inter-
national Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden. Ph.: 46-8-16 22 25; fax: [phone];
e-mail: [email protected]; web page: http://www.iies.su.se/data/home/zilibott/homepage.htm.