By Hafiz Akhand
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Extra resources for Economic Development in Pacific Asia
The implication of this finding is that the growth prospects of other developing countries trying to emulate Singapore’s success are rather gloomy. Similar conclusions are echoed in Krugman (1994). Like Young (1992, 1995), Collins and Bosworth (1996) also use the primal approach to growth accounting, but for a large set of countries. 29) where Ht is an index of labour quality and hence Ht Lt is the skilladjusted measure of the labour input. 30) implies that TFP growth is the rate of growth output qˆt less the share-weighted growth of the factor inputs kˆt and ˆt .
1) above: arithmetic weighting due to Abramovitz (1956) and Kendrick (1961), and geometric weighting due to Solow (1957) and Jorgenson and 26 The East Asian Miracle Griliches (1967). Both weighting methods are deeply rooted in the literature and lead to similar measures of TFP growth. The geometric indices, however, are more widely used in the literature. We discuss the two approaches in turn. 2) reflects the assumption that parameters of the production technology, δi and ρ, across time or firms or countries are the same except the efficiency parameter A.
7) above. Thus, this alternative approach exploits the idea that TFP growth can be interpreted as the Solow residual, the residual growth rate of output not explained by the growth in factor inputs. Meta-production function approach Most TFP growth measurement exercises assume constant returns to scale, neutral technological progress, and profit maximization with competitive output and input markets. However, these assumptions are arbitrary and the resulting TFP growth estimates are sensitive to these assumptions.
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