Professor Hugo Hopenhayn, from University of California, gives a lecture on the productivity of national economies

Last Monday, 15 September, the School of Business, Economics and Law organised a complementary activity for undergraduate students delivered by Professor Hugo Hopenhayn, a member of the Department of Economics at University of California (UCLA) and a Visiting Professor at CUNEF Universidad. During the session “The productivity of nations”, he highlighted the following key ideas:

• There are huge differences in income between countries. The per-capita income of the richest 10% is 30 times higher than that of the poorest 10%.
• Although the global economy has grown between 1960 and 2018, income disparity persists. But there are miracles and disasters like Singapore and Venezuela.
• This disparity is explained by differences in capital stock (14%), human capital (22%) and, above all, total factor productivity (64%).
• Companies and corporate human capital contribute to adequate resource allocation, leading to improved productivity and, consequently, income.
• There are distortions and barriers that hinder the allocation of resources to “good” companies. These include taxes and exemptions distorting returns, restrictions affecting resource reallocation, barriers to entry and exit in an industry or market, growth barriers, legal difficulties affecting recruitment, or market power and profit margins.
• The lack of financial development and, therefore, credit restricts entrepreneurship options—limiting them to those who have more resources, but are not necessarily more qualified—and business growth.