Abstract
<abstract><p>In his seminal work, Fontela (1989) set up the distributional rule of productivity gain in the input–output context (total factor productivity surplus, TFPS). Garau (1996) proposed an extension, to identify a measure of surplus, called purchasing power transfer (PPT). This measure is given by the productivity gains and market surplus generated by the extra-profit conditions derived from the rental positions detained by agents. Such a decomposition is useful because it provides information about the degree of non–competitiveness in different markets. In this paper, we compute and explain Fontela's (1989) TFPS by comparing it with Garau's (1996) PPT for Italy over 2009–2014.</p></abstract>
Highlights
During the 70s and the 80s most of the industrialised countries experienced a fall in productivity
Lo Cascio e Pulido (2000) found that in general there is an inverse correlation between prices and productivity, except for those sectors, such as agriculture, for which prices are distorted by the intervention of the Government. Their analysis allows to state that one of the principal causes of the unbalanced growth is the structure of the market, the existence of imperfect competition, where prices do not adjust according to technical changes
The relation between technical changes, market structure and prices has been analysed by Anne Carter (1990) in a model where, to Baumol, it is considered an economic system composed by subsets of sectors, innovative sectors and sectors where no change in technology is observed
Summary
During the 70s and the 80s most of the industrialised countries experienced a fall in productivity. In general when government resources are used, especially when its use can produce distortions, it would be opportune to perform an ex ante impact evaluation of the interventions, in order to better define the implementation and to report to the population costs and benefits of such policy On this point, clearly explained by Mazzucato (2014), Fontela’s contribution on the nature of surplus redistribution generated by technological progress between firms/sectors composing the economic system is extremely important. The Emilio Fontela lesson, who began studying these issues in the 80s applying surplus distribution measures based on macroeconomic accounting systems (national states) or microeconomic ones (enterprises), is fundamental to understand, today, the distribution dynamics that trigger once the progress and innovation benefits appear In his seminal paper (1989), the principal finding was that “a growth process does imply a path of generation of TFP, it includes an internal transfer between industries of the gains of TFP”. In the last section we try to show three possible ways of extend TFPS/PPT analysis in order to support the dissemination of Fontela’s idea and to make its approach a more useful tool for economic analysis and policy evaluation
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