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Macroeconomic Determinants of Total Factor Productivity: An Analysis on the Example of OECD Countries

Author

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  • Nadide Yigiteli

    (Social Security Institution, Ankara, Turkiye)

  • Fahriye Ozturk

    (, Ankara Hacı Bayram Veli University, Faculty of Economics and Administrative Sciences, Department of Economics, Ankara, Turkiye)

Abstract

This study examines the macroeconomic determinants of total factor productivity (TFP), a critical factor for sustainable economic growth, within the scope of the dataset, including the 1990–2017 period and 27 OECD countries. The primary goal is to provide an up-to-date perspective on the literature within the scope of the analyzed period and country and provide an infrastructure for policy sets that will contribute to long-term economic growth. We use a two-stage empirical application in this context. First, the economic stability index, innovation index, technology diffusion index, education index, and economic freedom index are computed. Subsequently, the effect of these variables on TFP is investigated using panel regression methods. Results reveal that the technology diffusion index, which depicts the mechanisms of technology transfer from country to country, is the most important factor determining TFP. This variable is followed by the education and innovation indices. Another important finding of the study is that the economic stability and freedom indices have a significant impact on TFP. However, the magnitude of these effects is smaller than that of other variables.

Suggested Citation

  • 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.
    • Handle: RePEc:ist:journl:v:72:y:2022:i:1:p:293-328
    DOI: 10.26650/ISTJECON2022-1086903
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    More about this item

    Keywords

    Productivity; Technology; Growth JEL Classification: D24 ; O00 ; O47;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • 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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