Almost 80 percent of capital goods production in the world is concentrated in 10 countries. Poor countries import most … of their capital goods. We argue that international trade in capital goods has quantitatively important effects on … economic development through two channels: (i) capital formation and (ii) aggregate TFP. We embed a multi country, multi sector …

resulting excessive “capital shallowing” could be identified as a weakness of the rapid economic growth of the 1990s that may …