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By conducting wedge-growth accounting, we assess the contribution of the economic forces (expressed as wedges in the equilibrium conditions of the neoclassical growth model) driving Spanish economic growth from 1850 to 2019. We find that declining investment and capital-efficiency wedges slowed down Spanish economic growth and downsized the labour share from 1850 to the First World War. The crisis of the 1930s (Great Depression and Civil War) was primarily driven by the decrease of the labour-efficiency wedge. The simultaneous increase of both efficiency wedges drove the Spanish economic miracle of the 1960s, which was preceded by a large increase in the investment wedge, resulting in a significant rise of the investment rate. From the mid-1970s, the declining capital-efficiency wedge was the primary force driving the fall of the labour share and the output growth slowdown. However, the labour wedge drove the medium-term fluctuations of output, labour, and investment SI

The primary source of national/provincial output growth between input growth/factor accumulation growth (“perspiration growth”) and total factor productivity (TFP) growth (“inspiration growth”) has been long debated in Indonesia. Differing from the existing decomposition studies using the growth accounting analysis and stochastic frontier analysis, we applied a non-parametric frontier analysis method based on conventional and bootstrap data envelopment analysis to examine the sources of the national/provincial output growth for 1990–2015. We found that Indonesia’s national/provincial output growth is dominantly attributed to output growth due to input growth. Additionally, the national output growth largely relies on input growth in four on-Java Provinces—West, East, Central Java and Jakarta. Output growth due to TFP growth, which consists of output growth due to efficiency and technological growth, plays a minor role. Consequently, Indonesia experienced “perspiration growth” rather than “inspiration growth” in 1990–2015. The neoclassical model assumes that technological progress is essential for sustainable economic growth as factor accumulations exhibit diminishing returns and efficiency gains cannot recur once the frontier is reached. After 2000, there has been a rise in Indonesia’s technological growth, but factor accumulation has still been more substantial. The Indonesian government should coordinate policies promoting factor accumulation and TFP growth to facilitate sustainable economic growth in the future.

This paper aims to present empirical analysis of Iranian economic growth from 1950 to 2018 using data from the World Bank, Madison Data Bank, Statistical Center of Iran, and Central Bank of Iran. The results show that Gross Domestic Product (GDP) per capital increased by 2 percent annually during this time, however this indicator has had a huge fluctuation over time. In addition, the economic growth of Iran and oil revenue have close relationship with each other. In fact, whenever oil crises happen, great fluctuation in growth rate and other indicators happened subsequently. Even though the shares of other sectors like industry and services in GDP have increased over time, the oil sector still plays a key role in the economic growth of Iran. Moreover, growth accounting analysis shows contribution of capital plays a significant role in economic growth of Iran. Furthermore, based on growth accounting framework the steady state of effective capital is 4.27 for Iran’s economy.

The pharmaceutical industry of India is one of the most rapidly expanding research-based industries of Indian manufacturing. This paper attempts to examine the trends in partial and total factor productivity (TFP) growth of India’s pharmaceutical industry using industry-level time series data covering a period of 25 years from 1993-94 to 2017-18, which is further divided into pre-product and post-product patent periods. Three alternative indices of growth accounting approach viz., Translog, Solow, and Kendrick have been used to measure the growth of total factor productivity with four input production framework. The study results indicate significant increasing trends in capital intensity as well as labour, energy and material productivity and a significant declining trend in capital productivity over the entire study period. This study also finds a positive turnaround in the TFP growth of Indian’s pharmaceutical industry during the post-product patent era. The decomposition analysis confirms that output growth in the pharmaceutical industry is input-driven rather than productivity-driven as TFP growth contributes only 8.5 percent to the observed output growth. From the policy standpoint, this paper also suggests greater emphasis on resource efficiency by improving the quality of factor inputs, particularly capital, through increased R&D activities and adoption of cutting-edge technology.

It is a fact that public expenditure has a strong association with industrial productivity. The industrial sector recorded slow growth of 5.43%, which adds 20.90% to the GDP of Pakistan (2017-2018). This study aims to find the effects of public expenditure on Total Factor Productivity (TFP) in the industrial sector of the country. The study constructed two different models. In the first model, the study used time series data from 1975 to 2018, and the growth of adjusted TFP was calculated by the growth accounting method. In the second model, the study collected data from 1977 to 2018 and checked the impact of government expenditure on the TFP growth in the industry. The unit root tests, Ordinary Least Square (OLS), and Vector Error Correction Model (VECM) were employed. The findings of the study revealed that public expenditures on education were significant and positively related to TFP growth in industries. Public expenditure on health, agriculture, and inflation had a significant and positive association with TFP growth in the industries. Foreign direct investment had a negative but significant impact on TFP growth. The results of the present study suggest that industrial productivity can be increased by increasing the expenditure on education and health.

From 2014 onwards Poland witnessed an unprecedented inflow of immigrant workers from Ukraine. Coupled with strong labour demand, this surge in labour supply provided a major contribution to Poland’s economic growth. However, due to problems with capturing immigration in Labour Force Survey data this contribution has remained hitherto largely unaccounted in official data. This paper uses a range of alternative official data sources to estimate the actual number of immigrants, and survey data on migrant characteristics, collected in four Polish cities, to estimate the effective labour supply of Ukrainian immigrants in terms of productivity-adjusted hours worked. The authors find that the arrival of Ukrainian workers was increasing the effective labour supply in Poland in 2013–2018 by 0.8% per annum. Imputing this additional labour supply in a growth accounting exercise they find that the (previously unaccounted) contribution of Ukrainian workers amounted to about 0.5 pp. per annum, i.e., about 13% of Poland’s GDP growth in 2013–2018. The same figure should be subtracted from the residual contribution of total factor productivity growth, suggesting that recent growth in Poland has been in fact much more labour-intensive than previously interpreted.

This paper analyzes patterns of long-term economic performance in all five Central Asian countries. We first look at sources of economic growth based on a simple growth accounting exercise. Our findings show that under the period of study total factor productivity growth rates were modest ranging from 1.7% for Kazakhstan, 1.4% for Uzbekistan, and 0.8% for Tajikistan and Turkmenistan to—0.4% for the Kyrgyz Republic. The second part of the paper is connected with exploring productivity level analysis across all Central Asian countries by decomposing differences in output per worker into differences in capital intensity and productivity. Results reflect different levels of productivity performance in the region compared with Japan and South Korea as frontier economies for the analysis.

El presente trabajo utiliza la metodología de contabilidad de crecimiento, llamada Two-Deflator Approach, para estimar la productividad total de los factores (PTF) en Costa Rica entre 1960 y 2019. Los resultados indican que el 14 % del crecimiento económico es explicado por el crecimiento de la PTF. El resto del crecimiento económico se asocia a las contribuciones del capital (52%) y del trabajo (34%), las cuales han sido positivas durante todas las décadas de este periodo. En cuanto a la contribución del trabajo, su aporte al crecimiento económico ha sido por la cantidad y no por la calidad de la mano de obra, con excepción del primer (1960-1969) y último periodo (2010-2019) en donde la calidad aportó positivamente al crecimiento económico. En términos de cambios, los resultados muestran que el 69% del cambio en la tasa de crecimiento durante el periodo está explicado por cambios en la PTF; el restante 31 % se explica por cambios en las contribuciones de los factores de producción (trabajo y capital). Una vez estimada la PTF, se utiliza un modelo GARCH para estimar la relación entre la instabilidad macroeconómica y el crecimiento de la PTF. Así, se encontró evidencia de que el crecimiento de la PTF en Costa Rica se ve afectado negativamente por inflaciones altas. Por su parte, el crecimiento de la PTF se beneficia de un mayor crecimiento de la apertura comercial, medida por la suma de importaciones y exportaciones a PIB, y se perjudica cuando existe una mayor volatilidad de la profundización financiera, medida por la razón de M1 o M2 al PIB.

This study introduces anew (adopted) method of indirect estimation of the development of the productivity structure in the regions, which at the same time allows estimation of the contribution resulting from changes within the capital factor. Its theoretical background is built on the principles of growth accounting. Within this framework the study employs an arguable assumption of analogy in development of multifactor productivity of industry between the national and regional level. The literature review and empirical results shows, however, that such an assumption may be correct in some cases. Therefore, the article enhances the existing productivity analysis capabilities at the regional level. Within the aim, this study verifies the potential of applicability of proposed method on the regions of Poland. It uses the measure of symmetric mean absolute percentage error (SMAPE) to evaluate the accuracy of method proposed against actual values and the results of two other frequently used methods for disaggregation of capital among the regions in acountry. The results indicate that the new method should be more accurate than the methods of regional decomposition of capital-based on value added, and flows investment accumulation. In fact, it seems to be quite correct especially in the industries of wholesale & retail trade, transport & storage, real estates, health & social work, and manufacturing. On the other hand, it is likely incorrect in the industries of information & communication activities, finance & insurance, and administrative & support activities. In general, the method seems to be more accurate for larger industries and vice versa. Higher precision is also observed for industries where capital demand is clearly increasing. Similarly, the method is more accurate in industries where none of the regions are more specialized and vice versa. Tato studie představuje novou (adaptovanou) metodu nepřímého odhadu vývoje struktury produktivity v regionech. Její teoretické zázemí je postaveno na principech růstového účetnictví. V tomto rámci studie využívá předpoklad analogie ve vývoji multifaktorové produktivity průmyslu mezi národní a regionální úrovní. Studie rozšiřuje stávající možnosti analýzy produktivity na regionální úrovni. Cílem studie je ověřit potenciál použitelnosti navrhované metody na příkladu polských regionů. Při hodnocení přesnosti navržené metody ve srovnání se skutečnými hodnotami a výsledky dvou dalších často používaných metod pro rozčlenění kapitálu mezi regiony používá míru symetrické střední absolutní procentuální chyby (SMAPE). Výsledky naznačují, že nová metoda by měla být přesnější než metody regionálního rozkladu kapitálu založeného na přidané hodnotě a toku akumulace investic. Zdá se být poměrně správná zejména v odvětvích velkoobchodu a maloobchodu, dopravy a skladování, nemovitostí, zdravotní a sociální práce a výroby. Na druhé straně se jeví jako méně spolehlivá v odvětvích informačních a komunikačních činností, financí a pojištění a administrativních a podpůrných činností. Obecně se zdá, že metoda je přesnější pro větší odvětví a naopak. Vyšší přesnost je pozorována také u odvětví, kde poptávka po kapitálu jednoznačně roste.

In spite of Ethiopia’s over a decade long double-digit economic growth that started in 2004, there seemed to be no significant change in the economic development of the country. This study sets out to investigate the factors that drive economic growth in Ethiopia and explain why the highly praised and rapid economic growth has led to little or no change in the welfare of the society. The study uses time-series data extending from 1950 to 2017 and employs descriptive statistics and a production function and growth accounting models to examine the factors that directly or indirectly impact major macroeconomic variables. Our findings show that real capital stock accounted for most part of the real GDP growth especially during the post-2004 period, while the contribution of labor or employment to economic growth was consistently low in the same period. Overall, while a disproportionately large share of the gains from economic growth accrued to a few capital owners, the bulk of workers, averaging about 41 percent of the country’s population, ended up taking only a small share of the economic pie. This shows that the country’s double-digit economic growth was not inclusive, and it has manifested itself by stagnant change in the welfare of the average citizen.

Resumo Este artigo mensura os determinantes do crescimento da renda per capita do Brasil no período 2004-2015, a partir do papel da produtividade e de variáveis socioeconômicas e demográficas. A investigação é feita de forma conjunta em uma abordagem regional (por grandes regiões) e setorial (contribuição de cada um dos setores da estrutura produtiva para o crescimento da renda per capita de cada unidade geográfica). Explicita-se o papel da eficiência produtiva e das mudanças estruturais na composição do emprego e dos preços relativos nesse crescimento. O artigo traz algumas contribuições para a literatura, sobretudo pela abordagem empírica ainda não explorada dentro do contexto regional e setorial. Os resultados indicam diferenças importantes nas contribuições de cada componente da decomposição a depender da unidade geográfica analisada, bem como heterogeneidades setoriais relevantes dentro e entre as unidades geográficas. Abstract The article measures the determinants of the Brazil's per capita income growth in the 2004-15 period, based on the role of productivity and variables related to the labor market and the demography. The investigation is carried out jointly in a regional (by Major Regions) and sectoral approach (contribution of each activity of the productive structure to the growth of each geographical unit). The role of productive efficiency and structural changes in the composition of employment and relative prices in this growth is highlighted. The article brings some contributions to the literature, mainly due to the empirical approach not yet explored within the regional and sectoral context. The results indicate important differences in the contributions of each component of the decomposition depending on the geographical unit analyzed, as well as relevant sectoral heterogeneities within and between such units.

Why did the Soviet economy slowdown in last decades before its collapse? How did the proximate sources of economic growth of Russia change after the transition from a planned to a market economy? Previous research has suggested inputs‐driven growth before the transition and total factor productivity (TFP) as its main driver afterwards. This paper presents a new growth accounting exercise for Russia and Russian industry, using new historical statistics and Russia KLEMS data for capital, the historical series of Russian gross domestic product (GDP) from the Hitotsubashi Asian Historical Statistics Project, and alternative measures of capital inputs. In contrast with previous studies, this paper shows that in Russia TFP was the main determinant of labor productivity performance before and after the transition. The contribution of capital intensity was relatively stable in both periods. For Russian industry, the difference between the planned and market economy periods appears in the impact of capital quality. Before the transition, growth structures overbore machinery, deteriorating capital quality and labor productivity growth, while in 1999–2008, the dominating contribution of machinery fueled growth. Finally, the paper shows that the transformational recession of 1990s can be partially explained by the fall of capital services.

Recent work highlights a falling entry rate of new firms and a rising market share of large firms in the United States. To understand how these changing firm demographics have affected growth, we decompose productivity growth into the firms doing the innovating. We trace how much each firm innovates by the rate at which it opens and closes plants, the market share of those plants, and how fast its surviving plants grow. Using data on all nonfarm businesses from 1982–2013, we find that new and young firms (ages 0 to 5 years) account for almost one-half of growth – three times their share of employment. Large established firms contribute only one-tenth of growth despite representing one-fourth of employment. Older firms do explain most of the speedup and slowdown during the middle of our sample. Finally, most growth takes the form of incumbents improving their own products, as opposed to creative destruction or new varieties.

Total factor productivity is an important driver of economic growth. It is therefore important to understand its determinants. This will help to enhance it and accelerate economic growth. The objective of this paper is therefore to investigate drivers of total factor productivity in Angola. The investigation covers the period 1995 – 2018. It is conducted for selected sectors of the economy. The results show that foreign direct investment has a positive effect on total factor productivity in all sectors. Increase in openness of the economy and depreciation the exchange rate have a positive effect on total factor productivity in the manufacturing sector. However, an increase in these two variables is associated with a decrease in total factor productivity of the primary and service sectors. The results indicate that a rise in inflation is associated with a decrease in total factor productivity in the manufacturing and service sectors. However, an increase in inflation is positively associated with an increase in total factor productivity in the primary sector. Increase in official development assistance impact negatively on total factor productivity in the primary and service sectors. This variable has a positive effect on total factor productivity of the manufacturing sector. The implication of these results is that Angola should pursue policies that attract foreign direct investment in order to ensure sustainable total factor productivity growth. The impact of other drivers such as openness of the economy, inflation, official development assistance and exchange rate depends on sectors. This implies that it is important for Angola to implement policies, which are specific to sectors. This will help to enhance the growth of total factor productivity.

In this paper we adopt a growth accounting projection model to estimate and characterize health-financing needs in Brazil as well as to assess the extent to which financing needs may diverge from spending capacity in the future. We estimate an annual increase of 0.71% in the share of projected financing needs relative to GDP, with excess growth rates being 0.74% and 0.69% for the public and private health sectors, respectively. Institutional reforms and public spending restrictions may leverage public-private segmentation in health financing throughout the next decades, thus potentially leading to losses of equity in the system. Our projections contribute to a scant empirical literature on health financing sustainability in low- and middle-income countries and shed light on the role of spending capacity and institutional constraints over the path towards universal health coverage.

The contributions to this Special Issue present the state of the art of growth accounting in economic history, exhibiting its strengths and weaknesses. Three set of articles compose the issue: comparative papers that discuss the challenges ahead, long‐run perspectives on Britain since the Industrial Revolution, Japan, Italy and Spain from the late‐19th century, and Latin America during the 200 years since independence, and post‐World War II episodes under Soviet and Fabian socialism and the transition to market economies in Eastern Europe and India. The papers reveal how sensitive the interpretation of results is to the quality of output and inputs and the growth accounting procedure employed and the need to adopt the new developments in growth accounting to improve economic history narrative.

This study analyses the impact of information and communication technology (ICT)-driven product and process innovation on productivity and economic output growth at the sectoral level in Korea. A t...

PurposeIn low-income economies agriculture plays an important role in promoting economic growth and reducing poverty. Agricultural growth achieved through diversification toward the higher value crops enhance income and mitigate risk. The present study focuses on one of the eastern Indian states namely “Jharkhand”; where agriculture is the mainstay for the 80% of its rural population. The state per-capita income is below the national average; however, it has registered an impressive growth, especially in the agriculture sector in the last one decade. In this study, the authors attempt to identify the components in sources of agricultural growth; the authors also estimate the determinants of overall agricultural growth.Design/methodology/approachThe study is based on the secondary data from 2000–2001 to 2015–2016. This paper first decomposes the agricultural growth into area, price, yields (technological improvement) and diversification effects through the method of growth accounting approach. Secondly, the study employs the new classical growth model through the ordinary least square (OLS) to examine the determinants of overall agricultural growth.FindingsThe author's findings indicate that there has been a shift in cropping patterns from the cultivation of cereals to non-cereals in the state during the study period. Among the major crops, the area under pulses cultivation has increased by 19% from 2000–t2002 to 2014–2016. The increase in area under cultivation and the diversification in favor of higher-value crops have been the major reasons for the accelerating overall agricultural growth in the state along with improvements in technology. The study reveals that increased use of fertilizer per hectare, capital formation and road density are the main determinants of high agricultural growth in the state.Research limitations/implicationsThe study is based on secondary data and based on one state. A primary study to complement this could have been better. The limited data available for some of important variables related to mechanizations are also a limitation of the present study.Originality/valueSeveral studies have analyzed the diversification and agricultural growth in India. With our best knowledge this kind of study has not been done so far for the state of Jharkhand in eastern India.

Resumen: El objetivo de esta investigación consistió en analizar la productividad total de los factores en la región de América del Sur aplicando el modelo Solow-Swan ampliado, siguiendo la propuesta de Mankiw et al. (1992). En este sentido, se utilizó la función de producción bajo el enfoque del modelo mencionado, para obtener las elasticidades del producto con respecto a los factores productivos, para su uso posterior en la contabilidad del crecimiento. Los resultados obtenidos sugieren que dichas elasticidades, en su mayoría, son consistentes con los supuestos de Mankiw et al. (1992), quienes argumentan que incluir al capital humano al modelo de Solow (1956) tendría como resultado que la participación del capital físico y del crecimiento poblacional tendrían un impacto mayor sobre el producto o ingreso de la población. Por otra parte, el análisis de la contabilidad del crecimiento demuestra que la principal fuente del crecimiento en la región ha sido la acumulación de factores productivos, mientras que, la productividad no ha sido un factor determinante en cuanto a la experiencia del crecimiento en Suramérica durante el período de estudio. Clasificación JEL: O40, O47. Abstract: The aim of the research was to analyze the total productivity of the factors in the region of South America applying the expanded Solow-Swan model according to the proposal of Mankiw et al. (1992). In this sense, the production function was used under the approach of the expanded Solow-Swan model, to obtain the elasticities of the product with respect to the productive factors, for their further use in growth accounting. The results obtained suggest that these elasticities are mostly consistent with the assumptions of Mankiw et al. (1992), who argue that the result of including human capital in the Solow model (1956) would be that the participation of physical capital and population growth would have a greater impact on the population product or income. On the other hand, the growth accounting analysis shows that the main source of growth in the region has been the accumulation of productive factors, while productivity has not been a determining factor in terms of growth experience in South America during the studied period. Clasificación JEL: O40, O47. Résumé: L’objectif de cette recherche était d’analyser la productivité totale des facteurs dans la région sud-américaine en appliquant le modèle de Solow-Swan élargi, tel que proposé par Mankiw et al. Dans ce sens, la fonction de production a été utilisée selon l’approche dudit modèle, afin d’obtenir les élasticités du produit par rapport aux facteurs de production, pour son utilisation ultérieure dans la comptabilité de la croissance. Les résultats obtenus suggèrent que ces élasticités sont conformes, pour la plupart, aux hypothèses de Mankiw et al. (1992), qui soutiennent que l’inclusion du capital humain dans le modèle de Solow (1956) aurait pour conséquence que la participation du capital physique et la croissance de la population auraient un impact plus important sur la production ou le revenu de la population. Par ailleurs, l’analyse de la comptabilité de la croissance montre que la principale source de croissance dans la région a été l’accumulation des facteurs productifs, alors que la productivité n’a pas été un facteur déterminant dans l’expérience de la croissance en Amérique du Sud au cours de la période étudiée. Clasificación JEL: O40, O47.

The status of West Africa as one of the least developed regions in the world eases the multiplication of studies on development in the area. However, despite their high number, these studies are more about macroeconomics policies and show little interest in the quality of the production process itself. This paper makes a comparative analysis of West African countries’ efficiency with a focus on four neighbouring countries. These are Benin, Ghana, Ivory Coast and Togo. The study is motivated by the need for going beyond the widely used growth accounting models and performing a comparative analysis between countries using another approach: The Stochastic Frontier Analysis. We find that technical efficiency is relatively high in the zone and varies from a country to another and over time. Ivory Coast turned out to be among the most efficient countries in the production process in the region. Incorporating human capital to the labour factor has different effects on efficiency according to the countries considered. Besides, the comparative analysis sheds light on the differences between the selected countries in both returns to scales and factors’ contribution to output.