Essays on productivity and productivity growth across countries and regions

The subject of this dissertation is the theoretical and empirical determinants of persistent differences in productivity across countries and regions. It contains an introduction and five chapters. Chapter 1 argues that differences in income per capita and total factor productivity across countries persist despite capital mobility because countries with low average human capital cannot attain comparative advantage in human capital intensive industries. Because of low average human capital, there is little direct foreign investment, and few capital good are imported. A theory of growth based on the interaction between human capital and technological change explains endogenous variations in investment rates, conditional convergence, unconditional divergence, technological convergence, and the slow rate of conditional convergence in open economies.;One critical aspect of economic development is that productivity growth and rising standards of living are realized through increasing specialization of intermediate inputs and producer services. Chapter 4 argues that when economies inherit too small a range of intermediate inputs and producer services, final goods producers are forced to use labor intensive methods of production which trap the economy into underdevelopment.;Chapter 5 looks at data on the spatial dimension of externalities, increasing returns, and productivity. It estimates two different models--based on local geographical externalities and the variety of local intermediate services--where the density of economic activity is the source of aggregate increasing returns. Accounting for the density of economic activity at the county level is crucial for explaining the variation of productivity at the state level in the U.S.;Differences in productivity across cities and regions are a feature of all economies. Chapter 6 studies how these differences can emerge endogenously and evaluates their aggregate consequences. The argument presented is based on endogenous differences in the degree of complementarities among locally available inputs.;Do minor dynamic increasing returns at the disaggregate level smooth out in the aggregate? Chapter 3 demonstrates that relatively minor dynamic increasing returns will lead to aggregate dynamic increasing returns with dramatic effects on market efficiency if inputs are demand complements. Only if inputs are strong substitutes will minor dynamic increasing returns smooth out in the aggregate.