Neoclassical growth models require large productivity/distortion differences across countries to produce the observed disparities in the wealth of nations. In this paper I develop an otherwise very standard neoclassical model with technology adoption and schooling decisions, and show that in...

Differences in the relative price of investment over consumption goods across countries are big, even after excluding non-tradable consumption goods. We interpret these differences as arising from differences in a wide range of policies that increase the cost of investment. Under this...