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Total Factor Productivity, Human Capital and Outward Orientation: Differences by Stage of Ddevelopment and Geographic Regions

Author

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  • Stephen M. Miller

    (University of Nevada and University of Connecticut)

  • Mukti P. Upadhyay

    (Eastern Illinois University)

Abstract
Do openness and human capital accumulation promote economic growth? While intuition argues yes, the existing empirical evidence provides mixed support for such assertions. We examine Cobb-Douglas production function specifications for a 30-year panel of 83 countries representing all regions of the world and all income groups. We estimate and compare labor and capital elasticities of output per worker across each of several income and geographic groups, finding significant differences in production technology. Then we estimate the total factor productivity series for each classification. Using determinants of total factor productivity that include, among many others, human capital, openness, and distortion of domestic prices relative to world prices, we find significant differences in results between the overall sample and sub-samples of countries. In particular, a policy of outward orientation may or may not promote growth in specific country groups. even if geared to reducing price distortion and increasing openness. Human capital plays a smaller role in enhancing growth through total factor productivity.

Suggested Citation

  • Stephen M. Miller & Mukti P. Upadhyay, 2002. "Total Factor Productivity, Human Capital and Outward Orientation: Differences by Stage of Ddevelopment and Geographic Regions," Working papers 2002-33, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2002-33
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    References listed on IDEAS

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    Cited by:

    1. Omer Siddique, 2022. "The Determinants of Total Factor Productivity Growth in Pakistan: An Exploration," PIDE-Working Papers 2022:4, Pakistan Institute of Development Economics.
    2. Ville Kaitila, 2016. "GDP growth in Russia: different capital stock series and the terms of trade," Post-Communist Economies, Taylor & Francis Journals, vol. 28(2), pages 129-145, April.
    3. Verda Salman & Aliya H. Khan & Madeeha Gohar Qureshi, 2015. "Issues in Statistical Modelling of Human Capital and Economic Growth Nuxus: A Cross Country Analysis," PIDE-Working Papers 2015:126, Pakistan Institute of Development Economics.
    4. Ýsmail Seki, 2008. "The Importance of ICT for the Knowledge Economy: A Total Factor Productivity Analysis for Selected OECD Countries," Papers of the Annual IUE-SUNY Cortland Conference in Economics, in: Oguz Esen & Ayla Ogus (ed.), Proceedings of the Conference on Emerging Economic Issues in a Globalizing World, pages 72-90, Izmir University of Economics.
    5. Camilla Mastromarco & Léopold Simar, 2021. "Latent heterogeneity to evaluate the effect of human capital on world technology frontier," Journal of Productivity Analysis, Springer, vol. 55(2), pages 71-89, April.
    6. Omer Yalcinkaya & Halil Ibrahim Aydin & Ismail Siriner, 2016. "Macroeconomic Determinants Of Total Factor Productivity: New Generation Panel Data Analysis On Oecd Countries (1996-2015)," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 4-16, December.
    7. Aljarallah, Ruba A., 2021. "An assessment of the economic impact of natural resource rents in kingdom of Saudi Arabia," Resources Policy, Elsevier, vol. 72(C).
    8. Kolasa, Marcin, 2005. "What drives productivity growth in the new EU member states? The case of Poland," Working Paper Series 486, European Central Bank.
    9. Rodolfo Cermeño & Sirenia Vázquez, 2009. "Technological Backwardness in Agriculture: Is it Due to Lack of R&D, Human Capital, and Openness to International Trade?," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 673-686, November.
    10. Munusamy, Subramaniam & Rajamoorthy, Yogambigai, 2020. "Factor Accumulation and Total Factor Productivity Growth: ASEAN Economies," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(2), pages 67-76.
    11. Almas Heshmati & Masoomeh Rashidghalam, 2020. "Estimation of technical change and TFP growth based on observable technology shifters," Journal of Productivity Analysis, Springer, vol. 53(1), pages 21-36, February.
    12. Wei Zou & Hao Zhou, 2007. "Classification of Growth Clubs and Convergence: Evidence from Panel Data in China, 1981–2004," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(5), pages 91-106, September.
    13. Mastromarco, Camilla & Simar, Leopold, 2017. "Cross-Section Dependence and Latent Heterogeneity to Evaluate the Impact of Human Capital on Country Performance," LIDAM Discussion Papers ISBA 2017030, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    14. Anthony Enisan Akinlo & Oluwabunmi Opeyemi Adejumo, 2016. "Determinants of Total Factor Productivity Growth in Nigeria, 1970–2009," Global Business Review, International Management Institute, vol. 17(2), pages 257-270, April.
    15. Rodolfo Cermeño & Sirenia Várquez, 2005. "Technological Backwardness in Agriculture: Is It due to Lack of R&D Expenditures, Human Capital and Openness to International Trade?," DEGIT Conference Papers c010_014, DEGIT, Dynamics, Economic Growth, and International Trade.
    16. Mastromarco, Camilla & Ghosh, Sucharita, 2009. "Foreign Capital, Human Capital, and Efficiency: A Stochastic Frontier Analysis for Developing Countries," World Development, Elsevier, vol. 37(2), pages 489-502, February.
    17. Hamid Sepehrdoust & Saber Zamani Shabkhaneh, 2015. "Impact of Knowledge-based Components on Total Factor Productivity of MENA Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 19(2), pages 149-163, Spring.
    18. Liaqat Ali & Naveed Akhtar, 2024. "The Effectiveness of Export, FDI, Human Capital, and R&D on Total Factor Productivity Growth: the Case of Pakistan," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3085-3099, March.
    19. Nadide Yigiteli & Fahriye Ozturk, 2022. "Macroeconomic Determinants of Total Factor Productivity: An Analysis on the Example of OECD Countries," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-1), pages 293-328, June.
    20. Aragie, Emerta Asaminew & Balie, Jean & Ferrari, E., & McDonald, Scott & Morales Opazo, Cristian & Pauw, Karl, 2017. "Are there positive synergies between agricultural export promotion and food security? Evidence from African economies," Conference papers 332898, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    21. Yoga Affandi & Donni Fajar Anugrah & Pakasa Bary, 2019. "Human capital and economic growth across regions: a case study in Indonesia," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(3), pages 331-347, September.
    22. González, Germán & Constantín, Sebastián, 2008. "Explaining TFP Growth rates: Dissimilar effect of openness between different income groups of countries," MPRA Paper 17584, University Library of Munich, Germany.
    23. Deeti Saha, 2020. "Comparative Analysis of Economic Performance of SAARC Countries Based on the Estimated Cobb-Douglas Production Function," International Journal of Science and Business, IJSAB International, vol. 4(10), pages 39-63.
    24. Sarath Delpachitra & Pham Van Dai, 2012. "The Determinants of TFP Growth in Middle Income Economies in ASEAN: Implication of Financial Crises," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 11(1), pages 63-88, June.
    25. Phillip Akanni Olomola & Tolulope Temilola Osinubi, 2018. "Determinants of Total Factor Productivity in Mexico, Indonesia, Nigeria, and Turkey (1980–2014)," Emerging Economy Studies, International Management Institute, vol. 4(2), pages 192-217, November.

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    More about this item

    Keywords

    productivity; openness; trade policy; growth;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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