Natural resources and global misallocation

Monge-Naranjo, Alexander; Sanchez, Juan M.; Santaeulalia-Llopis, Raul

Natural resources and global misallocation

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Monge-Naranjo, A, Sanchez, J, Santaeulalia-Llopis, R. Natural resources and global misallocation. 2016. handle: http://hdl.handle.net/10230/27721

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Abstract

Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries. We find a significant and persistent degree of misallocation of physical capital. We also find a remarkable movement toward efficiency during last 35 years, associated with the elimination of interventionist policies and driven by domestic accumulation. In contrast, we find a much larger and persistent misallocation of human capital. Interestingly, when both production factors can be reallocated, capital would often flow from poor to rich countries.