The location of comparative advantages on the basis of fundamentals only

comparative advantage

Sources of productivity growth: Technology, terms of trade and preference shifts

productivity;growth models

Competition and Performance: The Different Roles of Capital and Labor

Neoclassical economists argue that competition promotes efficiency.They consider technology as given though.In the long run technological progress is an important determinant of the level of welfare and Schumpeter argued that monopoly rents help entrepreneurs to capture the gains of R&D and hence to invest in it.We investigate the overall effect of competition on performance. Performance is measured by TFP-growth.As a negative measure of competition we use rent.Rent is defined as the excess factor rewards over and above their perfectly competitive values (marginal productivities).Input-output analysis enables us to calculate rent for the Canadian sectors over a thirty-year period and to decompose it in its capital and labor components.In line with the literature we find that rent has no significant influence on productivity.We find an interesting result however: the components influence performance in opposite directions.Capital rent has a positive role and labor rent a negative one.The neoclassical economists and Schumpeter seem both right, but the mechanisms differ.The use of rent as a source of funding for R&D applies to capital and the argument that rent yields slack pertains to labor.competition;capital;labour;tfp

Competition and Performance:The Different Roles of Capital and Labor

Les économistes néoclassiques soutiennent que la concurrence est bonne pour l'efficacité. Mais pour eux la technologie est donnée. Et pourtant, dans le long terme, le progrès technologique est un déterminant majeur du niveau de bien-être. Schumpeter quant à lui soutient le point de vue opposé que les rentes de monopole incitent les entrepreneurs à investir en recherche et développement. Nous allons examiner l'effet global de la concurrence sur la croissance de la productivité. La concurrence est mesurée par l'inverse des rentes. Celles-ci sont définies comme les rémunérations factorielles qui dépassent leurs valeurs marginales en concurrence parfaite. Une analyse entrée-sortie nous permet de calculer les rentes pour les secteurs de l'économie canadienne sur une période de 30 ans et de les décomposer en rentes incombant au travail et au capital. Comme d'autres travaux antérieurs, nous ne trouvons pas d'effet significatif des rentes sur les productivités. Mais nous obtenons le résultat intéressant que les rentes factorielles n'affectent pas la croissance de la productivité dans le même sens. Les rentes sur le capital jouent favorablement sur la productivité tandis que celles sur le travail pas. À la fois les économistes néoclassiques tout comme les adeptes de Schumpeter ont raison, mais ils font appel à des mécanismes différents. Les rentes qui aident à financer la R-D sont celles sur le capital et celles qui portent au laisser-aller sont celles sur le travail.Neoclassical economists argue that competition promotes efficiency. They consider technology as given though. In the long run technological progress is an important determinant of the level of welfare and Schumpeter argued that monopoly rents help entrepreneurs to capture the gains of R&D and hence to invest in it. We investigate the overall effect of competition on performance. Performance is measured by TFP-growth. As a negative measure of competition we use rent. Rent is defined as the excess factor rewards over and above their perfectly competitive values (marginal productivities). Input-output analysis enables us to calculate rent for the Canadian sectors over a thirty-year period and to decompose it in its capital and labor components. In line with the literature we find that rent has no significant influence on productivity. We find an interesting result however: the components influence performance in opposite directions. Capital rent has a positive role and labor rent a negative one. The neoclassical economists and Schumpeter seem both right, but the mechanisms differ. The use of rent as a source of funding for R&D applies to capital and the argument that rent yields slack pertains to labor