Total Factor Productivity in the UK: A Disaggregated Analysis
This paper presents a set of estimates of the growth of total factor productivity for the United Kingdom during the period 1954–68. The growth of total factor productivity is defined as the difference between the growth rate of final output and that of a suitably weighted combination of productive inputs, both evaluated at constant prices: this difference, or ‘residual’ (Denison, 1967), can thus be thought of as showing the contribution of unidentified variables, such as economies of scale and advances in technical knowledge, to the process of economic growth. The estimates to be presented in this paper are for 35 distinct industries, covering the whole of the productive sector of the UK economy: government and non-profit making bodies such as charities have been excluded. The aim is to evaluate the contribution which each of these industries has made to the overall growth of productivity, using the information provided by a series of input-output tables to ensure that indirect effects of technical advance, through the provision of cheaper inputs to other industries, are taken into account. Thus the paper can be regarded as complementary to the large body of work, surveyed by Nadiri (1970, 1972), which has attempted to evaluate the aggregate contribution of factors such as the improved design of plant or the spread of higher education. A second aim is to assess the contribution of capital accumulation to technical advance.
KeywordsProductivity Growth Total Factor Productivity Technical Change Technical Progress Capital Good
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