Cross-Country Differences in Marginal Product of Capital and the Efficient Allocation of the World’s Capital Stock
Tidswell, Oliver George
Tidswell, Oliver George
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Abstract
Since his original publication in 1990, Robert E Lucas Jr’s observation of capital failing to flow between rich and poor countries has stoked debate across international development economics over its theoretical explanation. Since then, economists have sought to rationalize this observation through two explanations: fundamental production structure differences and capital market imperfections. This paper serves to build upon the marginal product of capital (MPK) compositions presented by Caselli and Feyrer (2007) to provide updated and refined data on national accounts. In reassessing cross-country MPK’s, near equalized differentials between rich and poor countries are observed.
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2022-01-01