NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Dominick G. Bartelme

Department of Economics, University of Michigan
238 Lorch Hall
611 Tappan Avenue
Ann Arbor, MI 48109
Tel: 734-717-1753

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Institutional Affiliation: University of Michigan

NBER Working Papers and Publications

June 2015Linkages and Economic Development
with Yuriy Gorodnichenko: w21251
Specialization is a powerful source of productivity gains, but how production networks at the industry level are related to aggregate productivity in the data is an open question. We construct a database of input-output tables covering a broad spectrum of countries and times, develop a theoretical framework to derive an econometric specification, and document a strong and robust relationship between the strength of industry linkages and aggregate productivity. We then calibrate a multisector neoclassical model and use alternative identification assumptions to extract an industry-level measure of distortions in intermediate input choices. We compute the aggregate losses from these distortions for each country in our sample and find that they are quantitatively consistent with the relations...
 
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