Marginal product of equipment and structures capital

Abstract

Is physical capital efficiently allocated across countries? In this paper, I revisit this question and examine allocation of equipment and structures capital. I measure returns to equipment and structures capital for 91 countries in 2004. The return to equipment is higher in poor countries while the return to structures capital is similar across countries, implying a cross-country misallocation of equipment. Deadweight loss from the equipment misallocation is approximately 3.6 percent of the world income.