Skip to main content
SpringerLink
Log in

Factor Misallocation and Development

  • Living reference work entry
  • First Online:
Book cover The New Palgrave Dictionary of Economics

Abstract

The large differences in income per capita across countries are mostly explained by differences in total factor productivity (TFP). This article summarises the evidence on the importance of resource allocation across productive units in explaining the observed differences in TFP across countries.

This chapter was originally published in The New Palgrave Dictionary of Economics, Online edition, 2013. Edited by Palgrave Macmillan

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

Bibliography

  • Adamopoulos, T., and D. Restuccia. 2014. The size distribution of farms and international productivity differences. American Economic Review 104(6): 1667–1697.

    Article  Google Scholar 

  • Baily, M., C. Hulten, and D. Campbell. 1992. Productivity dynamics in manufacturing plants, 187–267. Microeconomics: Brookings Papers on Economic Activity.

    Google Scholar 

  • Banerjee, A., and E. Duflo. 2005. Growth theory through the lens of development economics. Handbook of economic growth, Vol. 1A, Chapter 7. North-Holland.

    Google Scholar 

  • Bartelsman, E., J. Haltiwanger, and S. Scarpetta. 2013. Cross-country differences in productivity: The role of allocation and selection. American Economic Review 103(1): 305–334.

    Article  Google Scholar 

  • Bello, O., J. Blyde, and D. Restuccia. 2011. Venezuela’s growth experience. Latin American Journal of Economics 48(2): 199–226.

    Google Scholar 

  • Bhattacharya, D., N. Guner, and G. Ventura. 2013. Distortions, endogenous managerial skills and productivity differences. Review of Economic Dynamics 16(1): 11–25.

    Article  Google Scholar 

  • Bond, E., M. Crucini, T. Potter, and J. Rodrigue. 2013. Misallocation and productivity effects of the Smoot–Hawley tariff. Review of Economic Dynamics 16(1): 120–134.

    Article  Google Scholar 

  • Brandt, L., T. Tombe, and X. Zhu. 2013. Factor market distortions across time, space and sectors in China. Review of Economic Dynamics 16(1): 39–58.

    Article  Google Scholar 

  • Buera, F., J. Kaboski, and Y. Shin. 2011. Finance and development: A tale of two sectors. American Economic Review 101(5): 1964–2002.

    Article  Google Scholar 

  • Busso, M., L. Madrigal, and C. Pages. 2013. Productivity and resource misallocation in Latin America. B. E. Journal of Macroeconomics 13(1): 1–30.

    Article  Google Scholar 

  • Erosa, A., T. Koreshkova, and D. Restuccia. 2010. How important is human capital? A quantitative theory assessment of world income inequality. Review of Economic Studies 77(4): 1421–1449.

    Article  Google Scholar 

  • Eslava, M., J. Haltiwanger, A. Kugler, and M. Kugler. 2013. Trade and market selection: Evidence from manufacturing plants in Colombia. Review of Economic Dynamics 16(1): 135–158.

    Article  Google Scholar 

  • Foster, L., J. Haltiwanger, and C. Syverson. 2008. Reallocation, firm turnover, and efficiency: Selection on productivity or profitability? American Economic Review 98(1): 394–425.

    Article  Google Scholar 

  • Gabler, A., and M. Poschke. 2013. Experimentation by firms, distortions, and aggregate productivity. Review of Economic Dynamics 16(1): 26–38.

    Article  Google Scholar 

  • Greenwood, J., J. Sanchez, and C. Wang. 2013. Quantifying the impact of financial development on economic development. Review of Economic Dynamics 16(1): 177–193.

    Article  Google Scholar 

  • Guner, N., G. Ventura, and Y. Xu. 2008. Macroeconomic implications of sizedependent policies. Review of Economic Dynamics 11(4): 721–744.

    Article  Google Scholar 

  • Hall, R., and C. Jones. 1999. Why do some countries produce so much more output per worker than others? Quarterly Journal of Economics 114(1): 83–116.

    Article  Google Scholar 

  • Hopenhayn, H. 1992. Entry, exit, and firm dynamics in long run equilibrium. Econometrica 60: 1127–1150.

    Article  Google Scholar 

  • Hopenhayn, H., and R. Rogerson. 1993. Job turnover and policy evaluation: A general equilibrium analysis. Journal of Political Economy 101(5): 915–938.

    Article  Google Scholar 

  • Hsieh, C., and P. Klenow. 2009. Misallocation and manufacturing TFP in China and India. Quarterly Journal of Economics 124(4): 1403–1448.

    Article  Google Scholar 

  • Hsieh, C., and P. Klenow. 2012. The life-cycle of plants in India and Mexico. Working Paper 18133. National Bureau of Economic Research.

    Google Scholar 

  • Jones, C. 2011. Misallocation, economic growth, and input–output economics. Working Paper 16742. National Bureau of Economic Research.

    Google Scholar 

  • Kalemli-Ozcan, S., and B. Sorensen. 2012. Misallocation, property rights, and access to finance: evidence from within and across Africa. Working Paper 18030. National Bureau of Economic Research.

    Google Scholar 

  • Klenow, P., and A. Rodriguez-Clare. 1997. The neoclassical revival in growth economics: Has it gone too far? In NBER Macroeconomics Annual, ed. B. Bernanke and J. Rotemberg. Cambridge, MA: MIT Press.

    Google Scholar 

  • Leal, J. 2014. Tax collection, the informal sector, and productivity. Review of Economic Dynamics 17(2): 262–286.

    Article  Google Scholar 

  • Lucas, R. 1978. On the size distribution of business firms. Bell Journal of Economics 9: 508–523.

    Article  Google Scholar 

  • Manuelli, R., and A. Seshadri. 2006. Human capital and the wealth of nations. Unpublished manuscript.

    Google Scholar 

  • Prescott, E.C. 1998. Needed: A theory of total factor productivity. International Economic Review 39: 525–552.

    Article  Google Scholar 

  • Ranasinghe, A. 2012. Property rights, extortion and the misallocation of talent. Unpublished manuscript, University of Manitoba.

    Google Scholar 

  • Ranasinghe, A. 2013. Impact of policy distortions on firm-level innovation, productivity dynamics and TFP. Unpublished manuscript, University of Manitoba.

    Google Scholar 

  • Restuccia, D. 2011. Recent developments in economic growth. Economic Quarterly Federal Reserve Bank of Richmond 97(3): 329–357.

    Google Scholar 

  • Restuccia, D. 2013. The Latin American development problem: An interpretation. Economia 13(2): 69–100.

    Google Scholar 

  • Restuccia, D., and R. Rogerson. 2008. Policy distortions and aggregate productivity with heterogeneous establishments. Review of Economic Dynamics 11(4): 707–720.

    Article  Google Scholar 

  • Restuccia, D., and R. Rogerson. 2013. Misallocation and productivity. Review of Economic Dynamics 16(1): 1–10.

    Article  Google Scholar 

  • Restuccia, D., D. Yang, and X. Zhu. 2008. Agriculture and aggregate productivity: A quantitative cross-country analysis. Journal of Monetary Economics 55(2): 234–250.

    Article  Google Scholar 

Download references

Acknowledgements

I thank Tasso Adamopoulos and Margarida Duarte for helpful comments. All errors and omissions are my own.

Author information

Authors and Affiliations

  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Diego Restuccia

Authors
  1. Diego Restuccia
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

    Copyright information

    © 2013 The Author(s)

    About this entry

    Cite this entry

    Restuccia, D. (2013). Factor Misallocation and Development. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2870-1

    Download citation

    • DOI: https://doi.org/10.1057/978-1-349-95121-5_2870-1

    • Received:

    • Accepted:

    • Published:

    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

    • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

    Publish with us

    Policies and ethics

    Search

    Navigation