Why does capital composition differ so much across countries?
It makes sense to think that businesses and governments around the world decide on the kinds of capital to use (and in what proportions to use them) by weighing the costs and benefits of various possible combinations of equipment types. Clearly, the costs and benefits associated with a particular composition of capital vary from country to country and from business to business within a country. For example, Equatorial Guinea presumably uses proportionately far fewer computers than Ireland by intention. Part of the reason could be that it costs much more to ship computers to businesses in Equatorial Guinea because the country’s transportation infrastructure is less well developed—in fact, Equatorial Guinea has no paved roads. But this reason doesn’t hold up, because such costs also would affect other types of equipment, such as Fabricated Metal Products, which Equatorial Guinea does import. So we can conclude that, on average, computers provide a lower net benefit, relative to other typ
