The General Rate of Profit in a New Market Economy: Conceptual Issues and Estimates

Izyumov, Alexei; Alterman, Sofia

doi:10.1177/0486613405280801

Cited by 11 publications

(6 citation statements)

References 41 publications

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“…Our estimation of macroeconomic ROR is comparable to these in the literature. The majority of the crosscountry studies report highest average ROR to be found in less developed economies (Bigsten, 2000;Banerjee and Duflo, 2005;Izyumov and Alterman, 2005;Bai et al, 2006;Lu and Gao, 2009;Udry and Anagol, 2006;Chou et al, 2016). However our results differ from those reported in Caselli and Feyrer (2007) and some of the follow-up papers including Mello (2009) and Ferriera (2011).…”

Section: Figure2 Capital-weighted Ror By Country Typecontrasting

confidence: 90%

Capital Profitability and Economic Growth

Chou¹,

Izyumov²,

Vahaly³

2018

JEDS

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This paper analyzes the connection between the macroeconomic profitability of capital and potential GDP growth for 109 countries divided into highly developed (HDC), less developed (LDC), and transition economy (TEC) groups. We find that, contrary to some recent studies, the globalization of capital markets and more rapid capital accumulation in LDC and TEC have not led to the convergence of macroeconomic rates of return (ROR) across countries. The existing differences among national ROR imply underinvestment in the majority of developing and transition countries. The counterfactual estimation of potential changes in GDP assuming equalization of ROR reveals major gains that could accrue to developing countries.

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Section: Figure2 Capital-weighted Ror By Country Typecontrasting

confidence: 90%

Capital Profitability and Economic Growth

Chou¹,

Izyumov²,

Vahaly³

2018

JEDS

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“…(Source: Authors" calculations) Overall, capital profitability in LDC and TEC was higher than in HDC for all of its measures for most years. Our estimates of ROR generally match the results in the literature, where most cross-country studies reported ROR to be consistently higher in less developed economies (Bigsten, 2000;Banerjee and Duflo, 2005;Izyumov and Alterman, 2005;Bai et al, 2006;Lu and Gao, 2009;Udry and Anagol, 2006;Chou et al, 2016).…”

Section: Analytical Framework and Datasupporting

confidence: 87%

Return to Capital and Foreign Direct Investment: A Cross-Country Perspective

Vahaly¹,

Chou²,

Izyumov³

2018

IJBSS

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Using newly available data, the paper estimates aggregate macroeconomic rates of return (ROR) for 109 countries divided into highly developed (HDC), less developed (LDC), and transition economy (TEC) groups. We then analyze the connection between the ROR and crosscountry capital flows as measured by foreign direct investment (FDI). For the period of 1994-2014, we find statistically significant links between all measures of ROR and inflows of FDI associated with the prevalence of "downhill" capital flows across the world.

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“…In developing economies, net capital inflows and fast growth of domestic investment should have increased competition amongst capital owners, implying a decline of returns to capital. However, most of the existing studies of capital profitability in less developed economies (Bigsten, 2000;Banerjee and Duflo, 2005;Izyumov and Alterman, 2005;Bai et al, 2006;Lu and Gao, 2009;Udry and Anagol, 2006;Marquetti et al, 2010;Jetin, 2012) report ROC there to be significantly higher than in developed countries.…”

Section: Introductionmentioning

confidence: 99%

Rates of return on capital across the world: are they converging?

Chou¹,

Izyumov²,

Vahaly³

2015

CAMECO

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This article estimates levels and identifies trends in the profitability of capital in a broad sample of developed, developing and post-communist transition economies making up over 80% of global output. The underlying distributional and efficiency determinants of profitability are considered in the Marxian analytical framework. For the period of 1995-2007 leading to the Great Recession, our estimates indicate a trend towards convergence of national profit rates largely driven by the convergence of profitability in developing and transition economies. During this period, the level of profit rates in all groups of countries experienced growth with the global capital-weighted rate of profit increasing by approximately 50%. The main contributor to this growth in all groups of countries was the increase in average productivity of capital, measured by output-capital ratio. In developed and transition economies, the increase in profit shares of national income and the decline in the relative price of capital goods also contributed to profitability growth. In the same period for developing countries, profit shares and relative prices were relatively stable.

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The General Rate of Profit in a New Market Economy: Conceptual Issues and Estimates

Cited by 11 publications

References 41 publications

Capital Profitability and Economic Growth

Capital Profitability and Economic Growth

Return to Capital and Foreign Direct Investment: A Cross-Country Perspective

Rates of return on capital across the world: are they converging?

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