Mr. Rodrigo Garcia-Verdu, Alexis Meyer-Cirkel, Akira Sasahara, and Hans Weisfeld
-linearized Cobb-Douglas production function, which we call TFP b . The productivity measureTFP b is based on a strong assumption that all countries have the same factor shares. However, this measure of TFP covers a slightly greater number of countries – 27 LICs, 37 lower-middle income countries, 38 upper-middle income countries, 42 high-income countries, totaling 144 countries. TFP b estimates are used for robustness checks of regression analyses. 11
B. Results from Growth Accounting
Table 1 presents results from the growth accounting exercise for four groups of
exercises to identify TFP as the main driver underlying the superior GDP growth in the U.S. since the mid-1990s (see, for instance, Jorgenson and others, 2008; van Ark and others, 2008 ), in stark contrast with previous decades, when TFP growth performance in Europe was well above that of the U.S.
112. As a residual measureTFP has multiple interpretations, but it reflects in some way the overall efficiency of the production process . This study is an attempt to link the growth residual to policy-relevant determinants such as levels of human and ICT capital, the
½ percent in the 1990s, perhaps reflecting efficiency gains from the corporate downsizings and restructuring that took place in the late 1980s and early 1990s. In contrast, ISP growth held relatively steady at an annual rate of 2 percent in the 1960s, 1970s, and 1980s. In the 1990s, however, it has picked up sharply, averaging 3½ percent a year.
4. The growth-accounting framework to measureTFP was first introduced in Solow (1957) . The main assumption is that growth in the production of goods is equal to the weighted average of the growth in inputs of the aggregate
contribution to potential growth from currently very low levels as EU structural funds will come on stream and private investment increases on the back of a positive economic outlook and a pick-up in credit growth (see table 2 of the 2017 Article IV staff report for the growth projections for gross fixed capital formation). TFP growth, limited by crisis scars, will most likely contribute to overall growth in a more muted fashion than before the GFC. To reflect the downward shift in TFP growth, and absent any targeted measures, TFP growth is projected to continue on the
purposes of this study equal factor shares α=β=(1−α−β) =1/3 are assumed . To assess the robustness of our results, TFP was also estimated using different factor share values. This did not significantly change the final results (see below).
Trend GDP—adjusted TFP
11. TFP growth estimates derived using actual GDP make it difficult to determine to what extent the TFP fluctuations are driven by short-term factors such as droughts or business cycles, as opposed to longer-term economic trends . To measureTFP growth adjusted to such cycles, trend GDP was estimated
Research shows that international trade is an important channel for the transfer of technology. Building on this evidence, this paper examines the effects of inter- and intraindustry trade on technology transfer. The paper develops and tests the hypothesis that intraindustry trade stimulates more technology transfer than interindustry trade because countries are likely to absorb foreign technologies more easily when their imports are from the same sectors as their production and export sectors. The results of empirical tests for 87 countries during 1970–93 support this hypothesis.
countries), and Sub-Saharan Africa (20 countries). See the appendix for a complete list of countries. The data cover the period 1970–93.
To measureTFP the paper uses the growth accounting approach, which imposes conventional values for factor shares. It then uses three alternative measures of TFP to test the robustness of the results to a particular specification of the aggregate production function. These are given by