Alan Heston

The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988

The Penn World Table displays a set of national accounts economic time series covering many countries. Its expenditure entries are denominated in a common set of prices in a common currency so that real quantity comparisons can be made, both between countries and over time. It also provides information about relative prices within and between countries, as well as demographic data and capital stock estimates. This updated, revised, and expanded Mark 5 version of the table includes more countries, years, and variables of interest to economic researchers. The Table is available on personal computer diskettes and through BITNET.

A brief review of some problems in using national accounts data in level of output comparisons and growth studies

Abstract After an initial burst of enthusiasm for establishing their national accounts 30 or 40 years ago, some countries have made continuous improvements, while others have done little to maintain even their initial system. Presently most developing countries make their basic estimate of GDP from the production side, and most do not have adequate surveys to permit a consistency check of their production and expenditure side estimates. The base surveys for expenditures and production are typically over ten years old, and the lags in basic surveys for constructing constant price estimates are frequently longer. A number of countries estimate their growth from a weighted average of volume indexes and make no attempt at direct deflation; many of those that do deflate their current expenditure estimates do so at a very aggregate level. Users of national accounts should be aware of the varying quality of the estimates across countries and hopefully continual questioning of the numbers will help to encourage improvement.

Estimating Real Production and Expenditures Across Nations: A Proposal for Improving the Penn World Tables

In this paper we propose a new approach to international comparisons of real GDP measured from the output-side. The traditional Geary-Khamis system to measure real GDP from the expenditure-side is modified to include differences in the terms of trade between countries. It is shown that this system has a strictly positive solution under mild assumptions. On the basis of a set of domestic final output, import and export prices and values for 14 European countries and the U.S. it is shown that differences between real GDP measured from the expenditure and output-side can be substantial, especially for small open economies.

Changes in the world income distribution

Abstract Drawing on new international comparison estimates for 127 nations, this study examines in some detail for the decinnial years 1950–1980 the world size distribution of income. Different income concepts—national output valued in different ways, and also consumption alone; and income per-equivalent adult as well as per capita—have been considered in judging how world inequality has changed. The principal findings are: (i) at a point in time, the intercountry differences in income—differences among nations—are greater than the usually observed intracountry differences in income—differences within nations; and (ii) over time systematic differences in national economic growth rates of countries led on balance to very slightly increased intercountry inequality (quite possible not beyond the margin of measurement error) but that (and this judgment is quite tentative) the changes in intracountry inequality over time have left inequality in the overall distribution unchanged.

International and interarea comparisons of income, output and prices

Economists wish to compare prices, real income, and output across countries and regions for many purposes. In the past, such comparisons were made in nominal terms, or by using exchange rates across countries, ignoring differences in price levels and thus distorting the results. Great progress has been made in interspatial comparisons in the past thirty years, but descriptions and discussions of the new measures have been scattered in unpublished or inaccessible papers. International and Interarea Comparisons of Income, Output, and Prices includes discussions of developments in the United Nations International Comparison Program, the largest effort in this field, and in the ICOP program on the production side, including efforts in both to extend the comparisons to the formerly planned economies. Other papers in this volume explore new programs on interspatial comparisons within the United States. There are also theoretical papers on how interspatial comparisons should be made and several examples of uses of such comparisons.

Institutional Flaws and Corruption Incentives in India

Abstract India has achieved a respectable rate of economic growth in an environment that is quite permissive of corrupt practices to the extent that acts of corruption, if sufficiently clever, are not scorned but praised. Despite the coexistence of corruption and unprecedented economic growth we argue that there is unrealised potential for further growth that is held back by the institutions of administration and associated corruption. With growth as substantial as it has been there is less pressure on those at the top to restrain corruption. There is still significant room for the Indian economy to accelerate its growth through steps to reduce corruption particularly as it impacts businesses and individuals in their day-to-day economic pursuits. A simple framework is sketched to describe the transactions that lead to grand, systemic and petty or retail corruption. The focus of this paper is on the institutions of administration that foster corruption at all levels and the consequences of petty corruption on the poor, particularly in urban areas. Our argument is that it is difficult for India to achieve its economic potential when a large portion of the population cannot mobilise what capital it possesses and continually finds interactions with authority met with requests for bribes and other forms of harassment. However, actual and perceived corruption in a vigorous democracy like India is also an integral part of the political process. Accusations of illegal behaviour are often a routine part of the election process and campaign finance.

Official Yields Per Acre in India, 1886-1947; Some Questions of Interpretation

A main concern of historical studies of agriculture has been the trend in simple welfare measures like total and per capita production. These welfare measures are of particular importance for interpreting the economic history of India since 1880 because of the dominance of the agricultural sector. Over half the value of total output consisted of agricultural crops; further output per worker in agriculture is often taken as an approximation for trends in output per worker in other sectors, particularly services. Total and per capita production are affected by changes in acreage in all crops, change in acreage from lower to higher yielding crops, and changes in the yield of each crop. In this paper our concern is only with yields per acre in various crops, and not with changes in total acreage or crop composition, even though these latter two factors may be quantitatively more important in affecting agricultural output. However, the effects of acreage increases and changes in cropping patterns are in turn dependent on what yields per acre are assumed for the changed acreage, and cannot be properly assessed without knowledge of yield changes. It is generally accepted that yields per acre as well as total availability of food grains declined under the British during the period 1890-1947. Blyn (1966) has demonstrated that acceptance of official statistics on acreage and output in India means acceptance of a declining per capita availability of foodgrains. Blyn (1966 : 151) found the trend in yields to be -0.18% per year for foodgrains during *The research underlying this paper was done as a fellow of the American Institute of Indian Studies during the year !965-66. The author is indebted to the Record

Using Scanner Data to Estimate Country Price Parities: A Hedonic Regression Approach

This paper uses scanner data from the bar-code readers of retailers to provide estimates of inter-country price parities at the level of the basic heading. The use of such data is appealing given its extensive coverage of transactions, information on weights, prices and characteristics of items at a highly detailed level. The study uses dummy variable hedonic and exact/superlative hedonic index number formulations applied to an inter-country context for both bilateral and multilateral comparisons. Unlike conventional methods, such methods are not confined to matched samples comparisons and thus make use of the entire sample. Their application extends to price survey data using checklists on characteristics. The application is to scanner data on about 1 million transactions for television sets over two months in three countries. It is, to the authors’ knowledge, the first such use of scanner data and application of the above hedonic frameworks in this context.

Inequality among Nations: 1950 and 1975

Differential growth rates of both national product and population among countries lead over time to changing patterns of relative affluence and poverty. In this chapter the consequences of these differential growth rates are investigated by examining their implications for the world distribution of income over the period from 1950 to 1975. The results reported here are preliminary to a more comprehensive effort in progress which takes account of intra-country as well as inter-country income inequality.

The Standard of Living in Akbar's Time: A Comment

In his article on the &dquo;Population and Standard of Living in Akbar’s Time&dquo; .(The Indian Economic and Social History Review, March 1972), Ashok Desai argued that there was a substantial decline in living levels in India between 1600 and 1961. Desai provided two types of evidence, first that real wages declined, and second, that the availability of foodgrains declined. In addition Desai provided an estimate, derived from the above work, of population of India in 1600. In a comment Shireen Moosvi (IESHR, June 197 3) made several criticisms of Desai, particularly of his food production and population estimates. In this note I will argue that the inferences of Desai and also Moosvi about real wages are based on a large arithmetic error, and that Desai’s agricultural estimates are also very doubtful. These comments do not offer a particular view of economic trends since Akbar’s time, but only serve to question the estimates underlying Desai’s paper.