Forum of International Development Studies

Labor Productivity, Capital Accumulation, and Aggregate Efficiency Across Countries: New Evidence for an Old Debate

Wednesday, Mar 25, 2020 by Carlos Mendez Forum of International Development Studies

This article studies the proximate sources of labor productivity differences across countries. Using a panel dataset for 74 countries covering the 1960-2010 period, it first documents that, relative to the US, labor productivity of the median country has been mostly stagnant, while cross-country disparities have drastically increased. Next, through the lens of a production function framework, it evaluates the proximate sources of labor productivity: physical capital, human capital, and aggregate efficiency.

On the Development Gap between Latin America and East Asia: Welfare, Efficiency, and Misallocation

Tuesday, Feb 3, 2015 by Carlos Mendez Forum of International Development Studies

Both long economic stagnation in Latin America and sustained growth in East Asia imply a rapidly rising development gap between the two regions. Using a series of numerical decompositions, this article documents three facts about this gap. First, differences in welfare-adjusted development are larger than those predicted by per-capita GDP. Second, differences in labor productivity account for most of the differences in both production and welfare-adjusted development. Third, inefficient production is the main factor holding down labor productivity.