TFP Growth Rates Research Articles

Spatial Patterns of Technology Diffusion: An Empirical Analysis Using TFP

In this paper, we employ techniques developed in spatial econometrics to analyze spatial patterns of technology diffusion, to detect clusters and to estimate theoretical models that incorporate space explicitly. These techniques correct for misspecifications resulting from the omission of spatial linkages in standard empirical models of economic growth. Our dataset consists of TFP estimates for 73 countries over the period 1960-2000, and we find that TFP growth rates and levels are positively autocorrelated over space, meaning that high or low values tend to be clustered. We also find that TFP levels are becoming more clustered over time, suggesting the possibility that technology levels are converging locally. Estimation of spatial versions of the Nelson and Phelps (1966) model shows that the impact of being located close to a country with high TFP growth rates is positive and substantial.

Saving Rates in Latin America: A Neoclassical Perspective

Latin American countries have long exhibited low levels of saving rates when compared to other countries in relatively similar stages of economic development (e.g., Asian economies). Motivated by this fact, this paper examines the time path of the saving rates between 1970 and 2010 in three Latin American countries—Chile, Colombia, and Mexico—through the lens of the neoclassical growth model. The findings indicate that two factors, the TFP growth rate and fiscal policy (via tax rates and government expenditure), are capable of accounting for some of the major fluctuations in saving rates observed in these years. For instance, the impressive increase in Chile’s saving rate following the early 1980s debt crisis is likely to have resulted from a combination of high TFP growth and a tax reform that substantially reduced capital taxation. Counterfactual experiments also reveal that average saving rates in Latin America could have been some three percentage points higher, had the region experienced TFP growth similar to that of the Asian countries. This increase, however, is insufficient to bridge the observed gap between saving rates in the two regions.

Empirical Research on the Influence of E-commerce on TFP of China’s Service Industry

Based on e-commerce development index system of alibaba, this paper adopts DEA method and uses non parameter Malmquist index model to empirically analyze the TFP, corresponding technical progress rate and technical efficiency, with further analysis of the relationship between e-commerce and TFP, technical progress rate and technical efficiency of China’s service industry. The result is the development of technical efficiency is due to e-commerce eliminates the decrease of scale efficiency caused by the decrease of marginal output elasticity of factors like capital. That’s why the average growth rate of TFP of China’s service industry from 1997 to 2013 remains high level of 6.29%. Therefore, technical progress is the main power to promote the growth of TFP of China’s service industry.

Structural Change and Economic Growth

This paper constructs a multi-sector model of growth with differences in TFP growth rates across intermediate sectors that accommodates both the Kaldor and Kuznets facts.The different levels of technology among intermediate sectors bring changes to the relative prices of the intermediate goods,and then cause reallocation of labor in those sectors.TFP growth rate in the final product sector is determined by the structure of the intermediate sectors.It changes monotonically as the economy grows,and its direction of change is determined by the elasticity of substitution between intermediate goods.

Technical Change and Productivity Growth in the Indian Sugar Industry

Abstract This paper applies MPI approach to measure technical change and productivity growth in 40 Indian sugar companies for the period 2004-05 to 2013-14. The empirical findings show that on an average, Indian sugar companies have registered a negative TFP growth rate of 0.7 percent per annum, though it varies considerably across years, indicating to the existence of sugar cycle. Decomposition of TFP growth into technical change and technical efficiency change reveals that the negative growth is only due to technological regress. The study suggests that apart from bringing the technical change, rationalization of sugarcane price policy is need of the hour.

Competitiveness of Dairy Farms In Northern Europe: A Cross-Country analysis

The milk sector has received much attention in Europe due to the abolition of milk quotas in 2015 and its potential effect on the geographical distribution of milk production across countries. As a way of assessing the competitive advantage of Nordic EU countries, we investigated the productivity level and productivity growth of milk farms across eight countries of the Baltic Sea region from 1995 to 2010. We found considerable discrepancy in the productivity performance of dairy farms across countries. TFP growth rates indicate that, at farm level, the competitive positions of the older EU members are stable, and that there is no catching up from the newer EU entrants. We offer explanations for this evolution based on the different patterns of structural change followed by the studied countries.

THE DEMAND FOR LIQUID ASSETS, CORPORATE SAVING, AND INTERNATIONAL CAPITAL FLOWS

The recent period of capital outflows from emerging economies has coincided with an increase in their corporate saving. In this paper, we model corporate saving as a demand for liquid assets by credit-constrained firms in a dynamic open-economy macroeconomic model. We find that the implications of this model are very different from standard models, because the demand for foreign bonds is a complement to domestic investment rather than a substitute. We show that this complementarity is at work when an emerging economy is on its convergence path or when it has a higher TFP growth rate. This framework is consistent with a number of stylized facts found in high-growth, high-investment emerging economies.

Human capital, employment protection and growth in Europe

Using data for a large sample of manufacturing and service sectors in 14 EU countries, this paper shows that the value added and TFP growth rate differential between high and low human capital intensive industries is greater in countries with low than countries with high levels of employment protection legislation. We also find that such negative effect of EPL is slightly stronger for countries near the technology frontier, in the manufacturing sector and after the 1990s. We interpret these results suggesting that technology adoption depends on the skill level of the workforce and on the capacity of firms to adjust employment as technology changes: therefore, firing costs have a stronger impact in sectors where technical change is more skill-biased and technology adoption more important.

Structural Change and Non-Constant Biased Technical Change

Empirical evidence suggests that the differences in rates of technical progress across sectors are time-variant, implying that the bias in technological change is not constant. In this paper, we analyze the implications of this non-constant sectoral biased technical change for structural change and we assess whether this is an important factor behind structural transformations. To this end, we develop a multi-sectoral growth model where TFP growth rates across sectors are non-constant. We calibrate our model to match the development of the U.S. economy during the twentieth century. Our findings show that, by assuming non-constant biased technical change, a purely technological approach is able to replicate the sectoral transformations in the U.S. economy not only after but also prior to the World War II.

Analysis of Exogenous Factors Affecting TFP Growth of China’s Telecom Industry

Since 1998, the telecommunications industry in China has gained the great growth. Hence, the telecommunications charges have been continuously lowered, telecommunications technical services have been persistently innovated, and the telecommunications users and business revenues increased constantly, having exerted great effect on the society. But there are also new questions ahead: the TFP has gradually slowed down since 2011, and the unbalanced development is shown in the eastern, middle and western regions, but some areas are undergoing extensive growth. The paper researches exogenous factors affecting China telecommunications industry TFP growth. The result pointed out that the level of economic development and degree of industrialization had contributed, to some extent, to improving the TFP growth rates of the telecommunications industry; Population scale and population density played a positive role in promoting the TFP growth rates of the telecommunications industry; Technological innovation had no effect on the telecommunications industry TFP, but there appeared the inhibition efficiency trend.

New estimates and a decomposition of provincial productivity change in China

Productivity and efficiency change lies at the heart of achieving sustainable growth in China. This paper computes and decomposes provincial-level Färe–Primont TFP indexes for the period 1978 to 2010. On average across provinces, we find evidence of rapid TFP growth mostly due to technical change, but with changes in scale–mix efficiency also playing a supplementary role. Considerable heterogeneity from province to province is also documented both with respect to the rate of TFP growth and its components. Policy implications are discussed.

A Model of Slow Recoveries from Financial Crises

This paper documents highly persistent effects of financial crises on output, labor productivity and employment in a sample of emerging economies. To address these facts, it introduces a quantitative macroeconomic model that includes endogenous TFP growth through firm creation. Firm creators obtain funding from a financial intermediation sector which is subject to frictions. These frictions become especially severe in a financial crisis, increasing the cost of credit for firm creators and thereby lowering the growth rate of aggregate TFP. As a consequence, the model produces medium-run dynamics following crises that are in line with the data.

Rare Institutional Disruptions and Uphill Capital Flows

Standard international macroeconomic models overpredict capital flows into countries with relatively lower capital stocks and faster-growing TFP. Asymmetric invest- ment risk has been shown in similar models to be a significant driver of capital flows between otherwise symmetric countries. But can risk drive capital “uphill?” This paper builds a model with two large open economies to assess the ability of asymmetric aggregate risk to partially counteract the neoclassical convergence forces. The two economies are calibrated to the average 1980 capital stocks, TFP levels, and trend TFP growth rates of a group of 21 developed markets and a group of 21 emerging markets, respectively. In addition, the two economies’ TFP processes are subject to both transitory Gaussian shocks and rare disasters, both calibrated to evidence that emerging markets are not just more volatile, but are addi- tionally subject to rare disasters that are both more common and more severe than those in developed markets. At the baseline calibration, risk is able to prevent 82% of the flows that would have occurred due to the convergence forces, and if the initial gap in capital per worker and TFP in the average emerging market were 61% that which was observed in the data, the risk motive would exactly offset the convergence forces. This paper concludes that the literature’s insights on the first-order importance of risk remain relevant even in a setting where powerful countervailing forces would drive capital “downhill.”

Analysis over factors of innovation in China’s fast economic growth since its beginning of reform and opening up

The technological progress makes great contribution to the rapid economic growth of China during its past three decades of reform and opening up. An empirical analysis conducted over China's total factor productivity certifies this conclusion but it also reveals that China's TFP growth rate is not very high. We further explore the various stages of change of China's total factor productivity and the causes of these changes and finally take an analytical calculation over the present flaws of China's innovation system and offer some advices.

Non-Homothetic Preferences and Industry Directed Technical Change

Sectoral data features (i) changing relative expenditures of different sectors, (ii) non-constancy in relative prices and (iii) long-run trends in relative TFP growth rates across sectors. We provide a tractable theory of industry directed technical change, which is able to reconcile these findings. In doing so, this paper emphasizes the importance of directed technical change, nonhomotheticity of preferences and structural change as a long-run phenomenon. Using the input-output tables of the U.S., our theory helps us to reconstruct how structural change in terms of final consumption affects the market size of industry value-added. Arguing that the structural change across broad categories of final consumption is exogenous from the perspective of an individual firm, this gives us an instrument for the industrial market size (at the valueadded level). We then empirically test for the market size effect of induced innovation. Our findings suggest that a 1 percent increase in an industry’s market size (relative to GDP) leads to an increase in the TFP growth rate of about 0.3 percentage points over five years.

The post-independence decline and rise of crop productivity in sub-Saharan Africa: measurement and explanations

In this paper new estimates are presented for the path of TFP growth in African crop agriculture. With adjustment for the quality of inputs TFP growth rates declined from a rate of 1.5% per annum in the early 1960s to less than 0.5% per annum by the late 1970s. Since then the growth rate has risen steadily so by the early 2000s it was close to the levels achieved at the beginning of the period. These results follow from using a novel semi-parametric econometric approach to estimating TFP. Recent advances in panel econometrics are used to show the heterogeneity of TFP growth rates across countries. Expenditures on agricultural R&D, along with the reform of macroeconomic and sectoral policies have played a substantial role in explaining this pattern of TFP growth.

Ethiopia's Growth and Transformation Plan: A Computable General Equilibrium Analysis of Alternative Financing Options

Under the Plan for Accelerated and Sustained Development to End Poverty (PASDEP), implemented from 2005/06 to 2009/10, Ethiopia achieved rapid economic growth and laid a foundation for future growth by making substantial investments in infrastructure and human capital. Regardless of the financing strategy, the high TFP and GDP growth rates under the GTP imply high average income growth for both poor and rich households, in both rural and urban areas. Because the GTP involves a greater concentration of investment in non-agricultural sectors than did PASDEP, growth of incomes of urban households is higher in the GTP than under PASDEP. Conversely, income growth of the rural poor is slightly lower under the medium growth scenario with domestic savings (10.0 percent) than under a continuation of PASDEP growth and investment (10.6 percent). Thus, this analysis shows that if the GTP investment and sectoral growth targets are achieved, real incomes of the poor in Ethiopia would rise substantially. The base simulations indicate that real incomes of the poor rose under PASDEP from 2005/06 to 2010/11. Under GTP, this real income growth would be accelerated, provided there is sufficient foreign savings or mobilization of domestic savings to achieve the targets. Nonetheless, the simulations also suggest that agricultural growth will still be crucial for raising incomes of Ethiopia’s rural poor. Thus, investments that raise agricultural productivity will need to continue in order to ensure that the rural poor share in the substantial projected benefits that would result from achieving the high economic growth targets of the GTP.

Saving and Growth in Egypt

This study illustrates the mechanisms linking national saving and economic growth, with the purpose of understanding the possibilities and limits of a saving-based growth agenda in the context of the Egyptian economy. This is done through a simple theoretical model, calibrated to fit the Egyptian economy, and simulated to explore different potential scenarios. The main conclusion is that if the Egyptian economy does not experience progress in productivity — stemming from technological innovation, improved public management, and private-sector reforms — , then a high rate of economic growth is not feasible at current rates of national saving and would require a saving effort that is highly unrealistic. For instance, financing a constant 4% growth rate of GDP per capita with no TFP improvement would require a national saving rate of around 50% in the first decade and 80% in 25 years! However, if productivity rises, sustaining and improving high rates of economic growth becomes viable. Following the previous example, a 2% growth rate of TFP would allow a 4% growth rate of GDP per capita with national saving rate in the realistic range of 20—25% of GDP.

Does Regulation on CO2 Emissions Influence Productivity Growth?–The Empirical Test Based on DEA Analysis

In this paper we examine levels and trends in conventional and regulation on CO2 emissions sensitive productivity over the period 1995 to 2007. Firstly, we estimate and compare two type TFP index from regulations on CO2 emissions to no regulations over current levels and test the difference of TFP in two kinds of conditions. The major conclusions are as follows: Under co2 emissions restrictions, the eastern region has the highest TFP Growth rate while the western region has the lowest TFP growth rate .With accounting for convention, sensitive productivity growth for 28 regions on average is slightly higher than that of regulations on CO2, and efficiency change is the main source. Out of 28 regions, eight different regions shifted the frontier at least once. Econometric analysis indicates a number of variables that has important effects on e regulation on CO2 emissions sensitive measures of productivity, including variables relating GDP per capita, technical in efficiency, capital labor ratio, the energy intensity and openness. We find that these variables have different effects. In addition, policy implications are discussed.

Capital Misallocation and Aggregate Factor Productivity

We propose a sectoral–shift theory of aggregate factor productivity for a class of economies with AK technologies, limited loan enforcement, and a constant production possibilities frontier. Both the growth rate and TFP respond to random and persistent endogenous fluctuations in the sectoral distribution of physical capital which, in turn, responds to reversible exogenous shifts in relative sector productivities. Surplus capital from less productive sectors is lent to more productive ones in the form of secured collateral loans, as in Kiyotaki–Moore (1997), and also as unsecured reputational loans suggested in Bulow–Rogoff (1989). Endogenous debt limits slow down capital reallocation, preventing the equalization of risk–adjusted equity yields across sectors. Economy–wide factor productivity and the aggregate growth rate are both negatively correlated with the dispersion of sectoral rates of return, sectoral TFP and sectoral growth rates. We also find highly volatile limit cycles in economies with small amounts of collateral.