: capital, labor, and TFP. To better understand the TFPcomponent, two computations are carried out, one where TFP implicitly includes improvements to labor quality and the other where labor quality improvements are in principle recorded as increases in effective labor and thus removed from the TFPcomponent. The change in panel composition due to data limitations now shifts the panel’s average real GDP growth per capita to 3.8 percent for the period. 10
The main result highlighted by the third decomposition is the lesser contribution of capital in South Africa, where
labor force are obtained, TFP growth can be estimated as a residual, based on α’s assumed value.
5. There are some limitations to the model . Given the paucity of data on educational attainment, the analysis uses a basic production function that abstracts the contribution of human capital to growth, including only capital and labor as factor inputs. The TFPcomponent is measured as an unexplained residual and thus picks up measurement errors in the data, including the challenge of accounting for improvements in the quality and composition of physical and human
Ms. Nita Thacker, Mr. Sebastian Acevedo Mejia, and Mr. Roberto Perrelli
After earlier success, growth performance in most Caribbean countries has been disappointing since the early 1990s. With slower growth, output has fallen behind that of relevant comparator countries. This paper analyzes the growth experience of the Caribbean countries from a cross country perspective. Three findings stand out. First, the slowdown in growth is explained more by a decline in productivity rather than a lack of investment. Second, tourism has been a significant contributor to higher growth (through both capital accumulation and productivity) and lower output volatility, and in many countries there is scope for further expansion of this sector. Third, the small size and the fact that most of these countries are islands have limited growth. Policies aimed at improving productivity, further development of the tourism sector, and regional integration could pay dividends in terms of higher growth in the region.
International Monetary Fund. Western Hemisphere Dept.
, and/or (iii) changes in the use of land (a factor our methodology does not account for) would be reflected in the TFPcomponent.
Figure 3.2. Decomposition of Real GDP Growth
Sources: IMF, World Economic Outlook; International Labor Organization; Penn World Table 7.1; World Bank, World Development Indicators; and IMF staff calculations.
1 Simple average of countries within each group. Latin America includes all Latin American countries in our sample. LA6 includes Brazil, Chile, Colombia, Mexico, Peru, and Uruguay. Other South America (SA) includes
Employment growth per year
Labor force growth per year
Sources: World Economic Outlook and IMF staff calculations.
Capital, Labor, and Total Factor Productivity
11. The third decomposition breaks down real GDP growth (1996–2006 average) into three components: capital, labor, and TFP contributions . To understand the TFPcomponent better, two computations are carried out
The purpose of this paper is to examine factors that have constrained South Africa's growth since the end of apartheid by comparing its GDP components and its saving and investment performance with those of 10 faster-growing countries. The study finds that sluggish investment has undermined growth since 1996 and that the underinvestment is in part explained by limited saving. Thus, over the last decade, interactions between investment, saving, and production may have perpetuated slow growth in South Africa.
this period. In contrast, gains in TFP accounted for less than 5 percent of potential output growth before the Asian crisis. The TFPcomponent appears to have deteriorated steadily since 2006, contributing only 0.2 percent to growth in the 2006–10 period.
15. Capital accumulation is the dominating contributor to Indonesia’s growth ( Figure I.3 ). This was evident even before the Asian crisis. Following the Asia crisis and the decline in the investment, the contribution of capital accumulation, not surprisingly, declined to negative. The contribution of growth in