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International Monetary Fund. Western Hemisphere Dept.

Latin America has enjoyed strong growth momentum during the last decade. While factor accumulation remains the main driver of GDP growth, the recent acceleration is mainly explained by higher total factor productivity (TFP). However, moving forward, this growth momentum might not be sustainable given some natural constraints on labor, despite recent capital and TFP trends . Highly favorable external conditions—interrupted only temporarily during the 2008–09 global financial crisis—coupled with prudent macroeconomic policies bolstered GDP growth in most of

Mr. Roberto Cardarelli and Ms. Lusine Lusinyan
Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s, before the Great Recession. To many, the main culprit is the fading positive impact of the information technology (IT) revolution that took place in the 1990s. But our estimates of TFP growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not particularly stronger in IT-producing states or in those with a relatively more intensive usage of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed, there are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production “frontier.”
International Monetary Fund. Western Hemisphere Dept.

Cobb-Douglas production function with time-varying and state-specific labor shares. Second, we use a stochastic frontier analysis to assess the relative contributions to TFP growth from common technological trends and state-specific technical efficiency. Third, we analyze the determinants of TFP growth across U.S. states using panel data models that relate TFP growth to human capital, innovation, infrastructure, taxation, and regulatory framework. 47. There are a number of important caveats to analyzing TFP trends at U.S. state level . 16 In particular, there is

International Monetary Fund

-2010 Sources: Haver; and IMF staff calculation. 17. The second step, therefore, involves deriving trend TFP by smoothing the TFP time series . While measured TFP tends to be volatile, in part reflecting fluctuations in the capacity utilization rate, it usually shows a clear trend behavior that can be readily extracted using a simple HP filter or a regression of measured TFP on a time trend. This estimated TFP trend smoothes away cyclical fluctuations in capacity utilization and can therefore be plugged into the production function to estimate a series for potential

International Monetary Fund

performance is partly explained by the TFP trend which in turn depends on the above-mentioned factors. Consistently with recent empirical findings in less developed countries, the volatility of TFP reflects the instability of the above-mentioned determinants. 23 Agricultural sector TFP 46. The agricultural sector TFP is estimated using the same methodology. Tables 5A and 5B summarize the empirical results of the agricultural sector growth equations. Table 5A refers to the basic model without land; Table 5B considers the model with land. 24 Table 5A

Mr. Ajai Chopra

Productivity 1960–80 1981–89 1960–80 1981–89 1960–80 1981–89 Manufacturing -0.5 2.7 2.1 7.3 -2.8 -0.7 Intermediate -1.4 2.4 1.8 7.1 -4.0 -0.3 Capital goods 1.5 2.0 4.4 5.7 -1.6 -0.9 Consumer durables 1.0 2.6 3.5 7.6 -2.2 -1.2 Consumer nondurables -0.5 3.8 1.4 8.8 -2.1 -0.1 Source: Ahluwalia (1995) . Results of India-Specific Studies The most comprehensive study of TFP trends in India is that of Ahluwalia (1991) . 12 Her study