Production Ability and Economic Growth
Yildirim, Muhammed A.
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CitationBustos, Sebastián, and Muhammed A. Yildirim. “Production Ability and Economic Growth.” CID Research Fellow and Graduate Student Working Paper Series 2019.110, Harvard University, Cambridge, MA, March 2019.
AbstractProduction is shaped by capability requirements of products and availability of these capabilities across locations. We propose a capabilities based production model and an empirical strategy to measure product sophistication and location’s production ability. We apply our framework to international trade data, and employment data in the US, recovering measures of production ability for countries and cities, and sophistication of products and industries. We show that both country and city level measures have a strong correlation with income, and economic growth at different time horizons. Product sophistication is positively correlated with measures like education and training needed in the industry. Our model-based estimations also predict the diversification patterns through the extensive margin.
Citable link to this pagehttps://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37366834