Publications by Author: Ahmed, Faisal Z.

Alfaro, Laura, and Faisal Z Ahmed. 2007. “The Price of Capital: Evidence from Trade Data”.Abstract

In this paper we use highly disaggregated data on trade in capital goods to study differences in the price of capital across countries. Our strategy is motivated by the fact that most countries import the bulk of machinery equipment (from a small number of industrialized countries). We find the price of imported capital goods to be negatively and significantly correlated with the income of the importing country. Because most low-income countries import the bulk of capital goods, our results provide suggestive evidence that capital goods are more expensive in poor countries, consistent with the conventional explanation regarding the low real investment rates in poor countries.


Harvard Business School Working Paper 07-073, March 2007