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Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004

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Abstract

Gross domestic product per remunerated labor (GDP/L), known as the Mexican average productivity, grew very rapidly from 1965 to 1979; it increased at an average annual rate of 3.7%. But from 1979 through 2004, productivity stagnated with an average annual growth rate of only 0.19%. The hypothesis is that from 1965 through 1979, productivity increased rapidly because of concomitant growth in the utilized capital and energy per worker and the improvements in technology. After 1979, the productivity growth came to a standstill because of a slowdown in investment and stagnation in the utilized capital and energy per worker due to the sharply rising energy prices. The tool chosen to test this hypothesis is an aggregate Cobb-Douglas production function characterized by technical change embodied in the gross investment in new machinery and equipment. The estimation of this model shows energy as a cornerstone of productivity growth independent of capital and new technology.

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Authors and Affiliations

  1. Instituto Tecnológico y de Estudios Superiores de Monterrey, Ave. Eugenio Garza Sada #2501 Sur, Col. Tecnológico, 64849, Monterrey, Nuevo León, Mexico

    Flory Anette Dieck-Assad & Ernesto Peralta

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  1. Flory Anette Dieck-Assad
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  2. Ernesto Peralta
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Correspondence to Flory Anette Dieck-Assad or Ernesto Peralta.

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Dieck-Assad, F.A., Peralta, E. Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004. Empir Econ 44, 563–590 (2013). https://doi.org/10.1007/s00181-012-0557-5

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