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The Micro and Macro Productivity of Nations

Author

Listed:
  • Stephen Ayerst
  • Duc M. Nguyen
  • Diego Restuccia
Abstract
We examine aggregate productivity differences across nations using cross-country firm-level data and a quantitative model of production heterogeneity with distortions featuring operation decisions (selection) and productivity-enhancing investments (technology). Empirically, less developed countries feature higher distortions and larger dispersion in firm-level productivity, mostly resulting from the higher prevalence of unproductive firms. Quantitatively, measured cross-country differences in the elasticity of distortions with respect to firm productivity generate the bulk of empirical patterns and over two-thirds of cross-country labor productivity differences. Both selection and technology channels are important. Variation in static misallocation also plays an important role, albeit smaller.

Suggested Citation

  • Stephen Ayerst & Duc M. Nguyen & Diego Restuccia, 2024. "The Micro and Macro Productivity of Nations," NBER Working Papers 32750, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32750
    Note: DEV EFG PR
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    More about this item

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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