Natural Resources and Global Misallocation

• Authors: Raül Santaeulàlia-Llopis.
• BSE Working Paper: 994 | October 17
• Keywords: misallocation , natural rents , factor shares , international flows
• JEL codes: O11, O16, O41
• misallocation
• natural rents
• factor shares
• international flows

Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we provide a new methodology to estimate output shares of natural resources based solely on current rent flows data. With this methodology, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries. In sharp contrast with Caselli and Feyrer (2007), 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.