Abstract
The fundamental role of capital in economic growth has long been known. How capital should be defined and measured has been the subject of much discussion. The starting point of this study is methodological, as we define starting from a neo-classical production function the indicators for capital input and compare these with the traditional capital stocks of national accounts. The origin of Finnish capital measurement is also traced. In the empirical part of the paper, we apply the different capital measures to Finnish data for 1975–2001. This period is interesting as the early 1990s were turbulent times for Finland, with GDP declining by 1 1 per cent. We find as a result of our number-crunching efforts that there was a spectacular increase in capital productivity growth after the recession. Finally, we observe how our new estimates accord with the previous view on how capital has influenced recent Finnish historical economic development. Our main result is a resolution of the Artto-Pohjola paradox, as we show that a high rate of return was combined with a low capital productivity growth in 1975–1990.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.