ou have just conducted a growth accounting exercise for one Eastern European country. Your results show that during the period 2002-2007 the growth rate of per capita GDP was 5.9% where the contribution of capital was 4% and the contribution of workers was 1.4%. What was the contribution of TFP?
ou have just conducted a growth accounting exercise for one Eastern European country. Your results show that during the period 2002-2007 the growth rate of per capita GDP was 5.9% where the contribution of capital was 4% and the contribution of workers was 1.4%. What was the contribution of TFP?
Chapter16: Economic Growth
Section: Chapter Questions
Problem 3E
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You have just conducted a growth accounting exercise for one Eastern European country. Your results show that during the period 2002-2007 the growth rate of per capita GDP was 5.9% where the contribution of capital was 4% and the contribution of workers was 1.4%. What was the contribution of TFP?
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Step 1
Introduction
The term "total factor productivity" (TFP) refers to a comparison between total outputs and the total inputs utilized to produce an output. The indicator gauges TFP growth because both inputs and outputs are given in terms of volume indices.
The total factor productivity (TFP) measures output as a function of a particular set of combined inputs; a rise in TFP indicates an increase in output quantity that is not attributable to a rise in input utilization.
Consequently, TFP displays the combined effects of numerous elements, such as new technologies, efficiency improvements, economies of scale, management ability, and modifications in the structure of production.
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