5. USA is 387 times richer than DR Congo (or 145X in PPP terms)
Australia 24401 33369
Belgium 25055 33520
Germany 25420 33665
Canada 26143 36039
Hong Kong 34587 40599
Switzerland 37789 37780
United States 38206 43179
Japan 40481 31484
PPP
Richest
x4
Market Prices
GDP Per Capita (2/2) in USD $
11. Knowledge has a
large tacit
component.
Michael Polanyi (1966)
Channels for
knowledge
transmission are
limited to human
interaction
Kenneth Arrow (1969)
19. We use new exports as a measure
of productivity gain…
20.
21. Bahar, Dany, Ricardo Hausmann, and César A Hidalgo. 2014. Neighbors and the Evolution of the Comparative Advantage of Nations:
Evidence of International Knowledge Diffusion?. Journal of International Economics 92, no. 1: 111-123.
50. Costly to enforce...
…even more so at a global scale
Might slow down the economy
What is the right tax rate?
So, what about increasing “g”, instead?
51. “Knowledge and skill diffusion is the
key to overall productivity growth as well
as the reduction of inequality both
within and between countries” (Piketty 2014)
52.
53. Large and foreign firms tend to be more productive.
The introduction of large and/or foreign firms tend to
have knowledge and productivity spillovers in the local
economy…
54. However, “endogeneity” is present…
What if these MDPs arrived to counties that were already
growing?
55. Greenstone, Hornbeck and Moretti (2010)
Looks at the inequality dynamics of US counties where a “million
dollar plant” (MDP) was introduced, using “runner-up” counties as
control
56. Using a difference-in-difference approach, we compare what
happened to “winner” vs. “runner-up” cities (MSAs), in
terms of their Gini coefficient
A Natural Experiment with MDPs
We expect < 0
57. 15 years down the line, the
average “winner” county
ranks 0.02 points lower in
the Gini coefficient, across all
MSAs