"Barriers to Riches" by Stephen L. Parente, Edward C. Prescott

Barriers to Riches reflects a decade of research by the authors on this question. Like other books on the subject, it makes use of historical examples and industry studies to illuminate potential explanations for income differences.

Why isn't the whole world as rich as the United States? Conventional views holds that differences in the share of output invested by countries account for this disparity. Not so, say Stephen Parente and Edward Prescott. In Barriers to Riches, Parente and Prescott argue that differences in Total Factor Productivity (TFP) explain this phenomenon. These differences exist because some countries erect barriers to the efficient use of readily available technology. The purpose of these barriers is to protect industry insiders with vested interests in current production processes from outside competition. Were this protection stopped, rapid TFP growth would follow in the poor countries, and the whole world would soon be rich.

Contents
List of Tables
List of Figures
Preface
Acknowledgments
1 Introduction
2 International Income Facts
Evolution of Income Levels and Differences
Summary of Facts
Some Questions and Features of Candidate Theory
Appendix: Large Rapid Development Experiences
3 Growth Theory with No TFP Differences
The Standard Model
The Two-Sector Extension
The Intangible Capital Extension
4 Growth Theory with a Human Capital Sector
Human Capital Sector Model Extension
Direct Evidence of Human Capital's Role
5 Growth Theory with TFP Differences
The Model
Model Calibration
Findings
Steady-State Output and TFP Differences
6 Constraints on Firm Technologies and TFP
The Plant Technology and the Barrier
From the Plant Technology to the Aggregate Production Function
The Mapping from Barriers to TFP
7 Evidence of Barriers to Efficiency
The Textile Industry
Subsurface Mining in the United States
Relative Industry Productivities across Countries
8 Monopoly Rights: A Theory of TFP Differences
The Economy
The Monopoly Rights Arrangement
The Free Enterprise Arrangement
Quantitative Findings
Compensatory Schemes
9 Conclusion
Why England before Continental Europe
Why Not Earlier in China
Why the United States and Switzerland Did So Well
Why Japan Experienced Its Development Miracle
Development Policy: Competition, Free Trade, and Privatization
Final Comment
Notes
References
Index