Multifactor Productivity Growth Research Articles

Multifactor productivity growth enhancers across industries and countries: firm-level evidence

Multifactor productivity growth enhancers across industries and countries: firm-level evidence

Factors of productive capacity of the economy of Ukrainian regions in the innovation dimension

In modern economic management, innovations are crucial in ensuring productive development and economic progress. However, Ukraine has shown a noticeable lag in many aspects of innovation activity compared to developed countries worldwide. This includes technological equipment for production, efficiency of research and development, innovative and inventive activity, cooperation in the field of innovations, scientific capacity of GDP, and financing of research and development works. This article aims to explore the peculiarities and regularities of the relationship between innovative activity and the productive capacity of the economy of Ukraine's regions. The article primarily emphasizes that innovations are a crucial factor in enhancing productivity and economic growth in the current economic conditions. The features and regularities of the relationship between innovative activity and the productive capacity of the economy of Ukraine's regions have been investigated. Scatter diagrams showing the relationship between multifactor productivity and the scientific intensity of the economy of Ukraine's regions, the distribution of patents for inventions and utility models among regions, the share of innovation-active enterprises engaged in scientific cooperation on R&D, and expenses on R&D per employed person have been presented. To determine the change in the impact of these indicators on multifactor productivity, the analysis was conducted for the years 2013 and 2021. The results of the analysis indicate that not all innovative processes directly or significantly impact the growth of multifactor productivity in the regions of Ukraine, and some considered factors, on the contrary, have a reverse impact on its formation as they lead to its decrease. Attention is drawn to the existence of the so-called innovation paradox and productivity. Several cause-and-effect mechanisms leading to the innovation paradox have been analyzed. It has been established that despite current challenges, the post-war revival of the Ukrainian economy depends on implementing an effective strategy to increase innovation potential for productivity growth, requiring increased state support for innovative projects and encouraging the industry to modernize production with adequate funding. Keywords: innovative processes, technological developments, productive capacity, financial resources, patent activity, innovation paradox.

Does the Secular Stagnation hypothesis match the data? Evidence from the USA

This paper focusses on Secular Stagnation in the United States. It answers to two research questions. First: is Secular Stagnation a fact? Second: conditional to the previous reply, how does the literature meet the qualitative and quantitative evidence? I focus on historical annual data related to the USA from 1870 onwards. The contribution to the debate is manifold. Firstly, I provide a careful systematization of the concept and explain why this definition is crucial for the topic analysis. Secondly, I talk about Secular Stagnation in terms of labor and multifactor productivity growth: their decline since the 1970s is not comparable to any previous shortfall. Thirdly, the definition allows to evaluate whether present-day debates on the phenomenon are supported by data, but it also lets to disentangle the most relevant channels through which Secular Stagnation emerges. Therefore, I carry out a comparative validation exercise on the different lines of thought. Finally, as long as Secular Stagnation is confirmed as empirical evidence, also policy implications can be drawn from the different theoretical frameworks. Despite the several contrasting approaches and viewpoints, I trace out a complementary in policy implications.

How do the exploitation of natural resources and fiscal policy affect green growth? Moderating role of ecological governance in G7 countries

Natural resource consumption fulfil the necessities of any society. The way these resources are extracted matters for the economy and environmental quality. Likewise, increasing resource consumption and fiscal policies direct the green economic recovery. Green growth (GG), or environmentally adjusted multifactor productivity growth, is imperative to track sustainable economic performance. Therefore, this study explores the relevance of natural resources, fiscal policy, R&D spending, and ecological governance in deriving the GG of G7 countries from 1990 to 2020. Using Methods of Moments Quantiles, the results exhibit that fiscal policy, R&D spending, and ecological governance contribute to GG, while natural resources produce inhibitory effects. The positive influence of fiscal policy and ecological governance (R&D spending) is higher at lower (higher) quantiles. Inhibitory effects of natural resources are higher at lower quantiles and vice versa. However, the negative impact of natural resources is neutralised with the integration of ecological governance. This proposition is valued using the moderation term of both variables. Similarly, results are endorsed using alternative estimators addressing cross-sectional dependency and slope heterogeneity and offering valuable recommendations.

Multi-factor productivity growth with natural capital and undesirable output: A measurement for OECD and G20 countries

In the background of global warming, worldwide energy and environmental governance had received increasing attention. Measuring environmentally adjusted multi-factor productivity (EAMFP) can highlight the contribution of natural capital to economic development and the negative impact of pollutants on economic development. This paper incorporated natural capital and pollutants to construct a growth accounting framework, and collected input and output data from 51 OECD and G20 countries during 1990–2020. EAMFP of different income levels countries were analyzed, which can more accurately describe the process of sustainable development and is helpful for countries with the same income level to judge their sustainable development process. In addition, the output-pollution elasticity is used to measure the dependence of economic development on emissions of nine pollutants in these countries. Empirical results showed that: (i) Multi-factor productivity (MFP) is higher than EAMFP in 40 countries, indicating that traditional productivity overestimates the quality of economic development and has a negative impact on the adjustment of the sustainable development process. (ii) The governance process is not consistent across countries for different pollutants, but in general the economic growth is less dependent on pollutant emissions in high and upper-middle income level countries than in lower-middle income countries. (iii) The gap between GDP growth and pollution-adjusted GDP growth is the largest for lower-middle income countries, which indicates that current rate of economic growth is achieved at the cost of pollutant emissions. Differentiated policy implications for promoting EAMFP growth for countries with different income levels, such as increase investment in clean energy research and development, raise the entry threshold for pollution-intensive industries, and accelerate industrial structure transformation were proposed.

Asymmetric influence of renewable energy, ecological governance, and human development on green growth of BRICS countries

Due to adverse environmental consequences, green growth or environmentally adjusted multifactor productivity growth is indispensable for sustainable development. However, despite its significance, the driving factors of green growth remain underexplored in empirical evidence. Moreover, ecological governance and renewable energy consumption may direct the movement of green growth. Therefore, this study unveils the relevance of renewable energy consumption, environmental policy stringency, human development, and R&D spending in promoting or inhibiting the green growth of BRICS economies from 1990 to 2019. Using the Method of Moments Quantiles (MMQR), the findings report that renewable energy consumption, ecological governance, human development, and R&D spending stimulate green growth. The positive influence of these factors is substantial at higher quantiles of green growth. Manifestly, ecological governance significantly moderates the positive effects of renewable energy, implying that stringent environmental policies encourage higher energy transition and green growth. These findings are also echoed by alternative estimators and offer valuable policy recommendations.

China's resources curse hypothesis: Evaluating the role of green innovation and green growth

Recently, policymakers and scholars have been uncertain about the role that natural resources (TNRR) play in development due to the contradictory evidence in the existing literature. This study aims to investigate the true relationship between TNRR and economic growth in China from 1991 to 2014. This study also considers various green innovations and renewable energy as control variables. The estimated results asserted that the cointegration exists between economic growth (GDP), TNRR, environmentally adjusted multifactor productivity growth (EAMFPG), development of environmentally related technological innovation, and renewable energy consumption (REC). Besides, the novel moment quantile regression method is used to determine each variable's long-run elasticities, where TNRR is found to be negatively related to the GDP – validating China's natural resource curse paradox. Also, EAMFPG, DERTI, and REC adversely affect the GDP in the region. The results are robust as validated by the long-run estimators: fully modified ordinary least square, dynamic ordinary least square, and canonical cointegration regression. This study suggests the sustainable extraction of natural resources with the appropriate intervention of regulatory authorities and investment in environmentally-related technologies and renewable energy sectors to attain sustainable development.

Measuring environmentally sustainable growth in agriculture across the EU countries based on Solow residual-based MFP

Scientific publications on environmentally sustainable or green growth in agriculture are increasingly becoming more important but empirical research is scarce. In empirical studies, the most commonly accepted way to assess environmentally sustainable or green growth in agriculture is based on measures of total factor productivity (TFP) or multifactor productivity (MFP) growth. Both measures are important for analytical and monitoring tools that can help to better understand the factors affecting output growth as well as the determinants of changes in production factors (labour and produced capital) in agriculture. Growth of TFP or MFP is achieved through the application of technologies and advanced production practices that result in higher output from the same amount, or lower inputs (labour and produced capital).Conventional TFP and MFP are not suitable for the assessment of environmentally sustainable growth in agriculture because both indicators do not include environmental variables such as environmental pollution and natural capital. There is a lack of comparative empirical studies between EU countries. This study focuses on the problem of measuring environmentally sustainable growth in agriculture. The aim of this study is twofold: firstly, to develop a framework for the assessment of environmentally sustainable growth in agriculture, based on information collected in public databases; and secondly, to empirically analyse environmentally sustainable growth in agriculture in EU countries over the long period. The environmentally adjusted multifactor productivity (EAMFP) growth measure was applied to assess environmentally sustainable growth in agriculture of the EU’s countries. For analysis, the environmental pollution of agricultural production was expressed as net GHG emissions, and natural capital was expressed as the quality-adjusted agricultural land area.The research was conducted using literature overview, decomposition technique and cluster analysis method. The 28 EU countries (including the United Kingdom, which was a member of the EU until January 1, 2020) were included in the empirical analysis. The analysis covered the period between 2005 and 2019 and a five-year average annual change rates (2005-2009 and 2015-2019 respectively) were used to compare the environmentally sustainable growth in agriculture between the beginning and the end of the considered period, as is common in most agricultural growth studies.The findings show that pollution-adjusted GDP growth in agriculture was achieved in less than a five of the EU countries at the beginning of the considered period, and in most of the EU countries at the end of the considered period. In most of the EU countries, the environmentally sustainable growth in agriculture was mainly determined by technological progress, while the slow change in environmental pollution (net GHG emissions) did not have a significant contribution to agricultural growth in all EU countries. Following the hierarchical clustering method, three significantly different clusters of the EU countries were identified in terms of gross added value growth and technological progress in agriculture of EU countries in the context of environmentally sustainable growth.

The Contribution of Intangible Assets to the Growth of the Russian Economy

This paper studies the change in the contribution of intangible assets to economic growth in Russia after applying the Corrado, Hulten and Sichel (2005) approach to estimate an extended list of intangible assets. As a result, intangible assets contribution increased from 0.05 p.p to 0.15 p.p of 3.28 percent of growth in Russia in the period 2004–2014. These estimates show that the inclusion of the expanded list of intangible assets increases growth and redistributes production growth between capital accumulation and the growth of multifactor productivity towards capital accumulation, and between the accumulation of tangible capital and intangible capital towards intangible capital. The results differ from European countries, where intangible assets formed 9 percent of growth in 2004–2014. Comparing the structure of intangible assets in Russia and in Europe and the US, we conclude that in Russia, the highest contribution to the growth of intangible assets is due to intellectual property, while in developed countries, the contributions are distributed more evenly across different types of intangible assets under consideration.

The Price of Nails Since 1695: A Window into Economic Change

This paper focuses on the price of nails since 1695 and the proximate source of changes in those prices. Why nails? They are a basic manufactured product whose form and quality have changed relatively little over the last three centuries, yet the process for producing them has changed dramatically. Accordingly, nails provide a useful prism through which to examine a wide range of economic and technological developments that touch on multiple areas of both micro- and macroeconomics. Several conclusions emerge. First, from the late 1700s to the mid-twentieth century, real nail prices fell by a factor of about 10 relative to overall consumer prices. These declines had important effects on downstream industries, most notably construction. Second, while declining materials prices contribute to reductions in nail prices, the largest proximate source of the decline during this period was multifactor productivity growth in nail manufacturing, highlighting the role of the specialization of labor and reorganization of production processes. Third, the share of nails in GDP dropped back from 0.4 percent of GDP in 1810—comparable to today’s share of household purchases of personal computers—to a de minimis share more recently; accordingly, nails played a bigger role in American life in that earlier period. Finally, real nail prices have increased since the mid-twentieth century, reflecting in part an upturn in materials prices and a shift toward specialty nails in the wake of import competition, though the introduction of nail guns partly offset these increases for the price of installed nails.

USA carbon neutrality target: Evaluating the role of environmentally adjusted multifactor productivity growth in limiting carbon emissions

One of the most vital strategies to achieve sustainable development is to target green growth, which is pollution adjusted output growth rate. Since green growth addresses both economic performance and environmental sustainability, it is necessary for sustainable development. To gauge the environmental impact of increased output, researchers use conventional measure of output growth. However, these measures are not adjusted for pollution and hence, do not reflect the true growth performance of the economy. For this purpose, this study aims to investigate the role of green growth in limiting carbon emissions in the USA for the period of 1990–2019. The authors further examine the role of globalization and renewable energy consumption in affecting CO2 emissions of USA. The results show that in the long run, green growth, output, renewable energies, and globalization are important factors in affecting CO2 emissions of USA. The results of frequency causality test show that there is unidirectional causal relationship from output renewable energy consumption, green growth, and globalization to CO2 emissions in the long run and medium run. This study suggests interesting policies for achieving targets of carbon neutrality. There is a dire need to take instant actions to control climate change and to mitigate greenhouse gases (GHGs). To achieve the target of carbon neutrality, a downward adjustment of economic growth is necessary, which will help the country to abate the pollution emissions.

Environmental regulation and productivity growth: Main policy challenges

In this paper, we investigate the environmental regulation-productivity nexus for 18 OECD countries over the years 1990–2015 and discuss its main policy challenges. Our findings support the hypothesis that environmental policies generate positive productivity returns through innovation as suggested by Porter and Van Der Linde (1995). We find that environmental policies have a productivity growth-promoting effect. Both market and non-market based policies exert a positive but differentiated impact both on labour and multifactor productivity growth. As for specific policies, green taxes display the largest effect on multifactor productivity although with potentially negative redistributive effects. We also find that environmental regulation exerts an indirect positive impact on productivity growth fostering capital accumulation especially in high ICT intensive countries.

Is technological innovation making world "Greener"? An evidence from changing growth story of China

Countries around the world are making efforts to transform their industrial and economic structures in order to promote green growth, and environmentally adjusted multifactor productivity growth, that relies on cleaner and sustainable energy sources. With the Fourth Industrial Revolution coming into play, eco-friendly technologies have significantly improved and repaired the environmental conditions in modern economies. Many studies on the determining factors of green growth have attracted researchers and policymakers across the globe. However, thus far, no single study has reported the role of technological innovation, in the promotion of green growth. Therefore, this study examines the impact of technological innovation on green growth, in the presence of economic growth, globalization, research & development expenditures, and human capital between the periods of 1990 to 2018, with a multivariate framework in China. By using cointegration approaches, the results suggest that in the long-run, green growth depends on technological innovation, GDP, human capital, economic globalization, and R&D expenditures. Moreover, technological innovation is found to have a positive effect on green growth. On the policy side, any initiative that targets technological innovation, globalization, R&D, and human capital shall affect green growth. These policies should take approximately more than one year to start functioning.

Green growth and low carbon emission in G7 countries: How critical the network of environmental taxes, renewable energy and human capital is?

This study analyses the role of green growth in promoting a sustainable environment. In literature, the empirical and theoretical examination on the role of green growth in carbon dioxide (CO2) emissions is missing, especially in combination with other factors, i.e., human capital index, environment-related taxes and development of environment-related technologies. This study investigates the role of environmentally adjusted multifactor productivity growth (i.e. green growth) on CO2 emissions for G7 countries from 1991 to 2017. The study utilizes second generation panel data method(s), i.e. Cross-Sectionally Augmented Auto-regressive Distributive lag (CS-ARDL) model. The outcomes of theoretical and empirical findings indicate that both linear and non-linear term for green growth reduces CO2 emissions. Also, environmental tax, human capital and renewable energy use are found to decrease CO2 emissions. The impact of GDP growth both in short-run and long-run is environment depletion. However, our result supports the theoretical notion that green growth sustains environment quality. We obtained consistent results from panel causality test. Our results may further strengthen the belief of policymakers in developed countries on the promotion of green growth.

Green Innovation and Finance in Asia

Green innovation and green finance are two key components of sustainable development. In the most populous, fastest‐growing region in the world, Asian countries are pressed to maintain economic growth while addressing climate change and environmental externalities. Japan, South Korea, and China have each implemented policies to promote green innovation and finance conducive to such ends. While each country possesses unique capabilities, the extent to which they can promote environmentally adjusted multifactor productivity growth, green patent registrations, green bond issuances, green foreign direct investment, and environmental, social, and governance information disclosures stands to impact on their shifts to sustainable growth paradigms.

Social Investment Policy, Economic Growth, and Welfare States: Channels of Pro-Growth Effects of Policy

AbstractSocial investment (SI) policies have been popular among industrial countries in the past two decades. Governments hope that SI policies will promote productivity and economic growth by creating high-skill labor forces that can adapt to the imperatives of the new knowledge economy and technological advances, or that can create new technologies themselves. They also hope that SI policies will mitigate new social risks, such as single-parent families and workers in precarious employment by better preparing workers for jobs and promoting social inclusion. However, little research exists that empirically investigates whether or not SI policies really produce these positive outcomes. Of all economic outcomes, this paper focuses on economic growth and the channels of economic growth—multifactor productivity (MFP), physical capital investment, and labor input—and investigates whether SI policies promote growth in GDP and its channels. Data from 17 industrial countries are analyzed. The analysis finds that family support, education, and ALMP spending (all measured as spending per child, student, and an unemployed person, respectively) is positively associated with MFP and GDP growth, and that MFP growth is the main channel through which SI policies enhance GDP growth. Education spending boosts the growth of all of MFP, physical capital stock, labor input, and GDP growth via those channels. While family support does not promote the growth of labor input, the results suggest that larger family support spending leads to higher levels of labor input. Overall, these types of SI spending have generally positive effects on economic growth.

MEASUREMENT AND DETERMINANTS OF MULTI‐FACTOR PRODUCTIVITY: A SURVEY OF LITERATURE

AbstractThis paper surveys and synthesizes fast‐growing literature on the measurement and determinants of multi‐factor productivity (MFP). We identify three strands of the literature to measure MFP: the first is growth accounting, which decomposes observed economic growth into the contribution of factor inputs and technological change, called the Solow Residual; the second is index number methods, accompanied by frontier techniques; the third is growth regressions and econometric methods used to estimate productivity across countries and regions. We keep our focus on assessing the major strengths and weaknesses of commonly used methods for MFP measurement and categorize existing literature on the determinants of MFP growth into macroeconomic and institutional factors. We attempt to provide a reassessment and thematic survey of literature on the drivers of aggregate productivity, enabling policymakers to formulate effective economic policy.

Effective Financing of Environmentally Adjusted Multifactor Productivity Growth in Sustainable Development Framework – An International Comparative Study

Sustainability in innovation activities financing is undoubtedly one of the important requirements that determine the business environment in all developed countries of the world. Different countries apply different innovation models or policies, ways to support or finance their entrepreneurial innovation activities respectively. They significantly shape or cultivate an innovative environment in which different relationships and linkages between actors take place. Therefore, it is necessary to analyze individual determinants, their sustainability, and their efficiency in view of the expected outcomes – environmentally adjusted multifactor productivity growth. We used data from the OECD statistics 2009-2013 for all developed countries in the world. We used DEA (data envelopment analysis) and super-efficiency-DEA method for our international comparative study. Our results show that the developed countries use the combination of private and public financial sources in different way. These are countries that can be perceived as a benchmark - it is therefore possible to compare even partial values of indicators and define public policies for support of selected entrepreneurs. The DEA software also allows you to obtain a numerical benchmark of inputs and outputs for every country. Our finding contributes to the theoretical debate on innovation and eco-innovation models in framework of sustainable development. The results of the analysis confirm the importance of financial sources, human resources and sustainable public sector interventions that influence the environmentally adjusted productivity growth. Keywords: environmentally adjusted productivity growth, sustainable development, financing, OECD

TALES FROM THE TAILS: SECTOR-LEVEL CARBON INTENSITY DISTRIBUTION

The level of GDP, its sector composition and the carbon intensity of individual sectors together determine a country’s emissions. To evaluate the contribution of changes in each determinant, I construct counterfactual emissions scenarios in a sample consisting of 34 sectors in 37 countries over 1995–2009. I compare these scenarios quantitatively using a novel metric, namely the relative cumulative emissions. I find that the composition of output and the carbon intensity of sectors individually or jointly constrained emissions in a large majority of countries. This motivates an analysis of high- and low-carbon intensity sectors, denoted HCI and LCI, where emissions and value-added tend to be concentrated, respectively. I document the cross-country variation in HCI sectors’ carbon intensity and show it declines over time largely due to improvements in developing countries. HCI sectors tend to account for a smaller share of employment; be more capital intensive; and employ a workforce with a lower average skill level. Employment declined in HCI sectors and increased in LCI sectors with its composition shifting towards high-skilled workers in both. Capital intensity growth was faster but multifactor productivity growth was slower in HCI sectors.

The walking dead? Zombie firms and productivity performance in OECD countries

This paper explores the extent to which ‘zombie’ firms – defined as old firms that have persistent problems meeting their interest payments – are stifling labour productivity performance. The results show that the prevalence of and resources sunk in zombie firms have risen since the mid-2000s and that the increasing survival of these low productivity firms at the margins of exit congests markets and constrains the growth of more productive firms. Controlling for cyclical effects, cross-country analysis shows that within-industries over the period 2003–13, a higher share of industry capital sunk in zombie firms is associated with lower investment and employment growth of the typical non-zombie firm and less productivity-enhancing capital reallocation. Besides limiting the expansion possibilities of healthy incumbent firms, market congestion generated by zombie firms can also create barriers to entry and constrain the post-entry growth of young firms. Finally, we link the rise of zombie firms to the decline in OECD potential output growth through two key channels: business investment and multi-factor productivity growth.