Abstract
This paper models and estimates total factor productivity (TFP) growth parametrically. The model is a generalization of the traditional production function model where technology is represented by a time trend. It decomposes TFP growth into an unobservable time trend induced technical change, scale economies and an observable technology shifter index’s components. The empirical results are based on unbalanced panel data at the global level for 190 countries observed over the period 1996–2013. It uses a number of exogenous growth factors in modeling four technology shifter indices to explore development infrastructure, finance, technology and human development determinants of TFP growth. Our results show that unobservable technical change remains the most important component of TFP growth. Our findings also show that technical changes and TFP growth are unexpectedly negative across all country income groups and years.
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Notes
To conserve space, we do not report all the results. These can be obtained from the authors on request.
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Acknowledgements
Some of the material included in this paper was developed from the IZA Discussion Paper Series, IZA DP 2016-10448, http://ftp.iza.org/dp10448.pdf and the Global Labor Organization GLO Discussion Paper 2017–8, https://www.econstor.eu/handle/10419/152325. The authors are grateful to an Editor of the journal and three anonymous referees for their constructive comments and suggestions on earlier versions of this manuscript.
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Heshmati, A., Rashidghalam, M. Estimation of technical change and TFP growth based on observable technology shifters. J Prod Anal 53, 21–36 (2020). https://doi.org/10.1007/s11123-019-00558-5
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DOI: https://doi.org/10.1007/s11123-019-00558-5