Measuring and Explaining the Impact of Productive Efficiency on Economic Development
AbstractA limitation of most empirical cross-country studies that focus on determinants of gdp or gdp growth is that they fail to distinguish explicitly between inputs used in production and conditions that facilitate production. For example, physical capital, human capital, and labor are production inputs, whereas the quality of institutions, macroeconomic stability, and market quality are conditions that facilitate production. This article takes this distinction seriously and uses a stochastic frontier approach to study factors affecting economic performance. A panel data set of 71 countries for the 1980--98 period is used to estimate a production frontier with physical capital, human capital, and labor as inputs. The article also analyzes what drives productive efficiency, using the institutional framework, macroeconomic stability, market quality, and urbanization as possible explanatory factors. Urbanization turns out to be an important determinant, with the rule of law, inflation rate, and market quality also affecting productive efficiency. Copyright 2005, Oxford University Press.
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Bibliographic InfoArticle provided by World Bank Group in its journal The World Bank Economic Review.
Volume (Year): 19 (2005)
Issue (Month): 1 ()
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- Sophia P. Dimelis & Sotiris K. Papaioannou, 2011. "Technical Efficiency and the Role of ICT: A Comparison of Developed and Developing Countries," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 47(0), pages 40-53, July.
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- Nada Karaman Aksentijevic & Zoran Jezic, 2009. "Human Resources development and research capacity and their impact on economic growth," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 27(2), pages 263-291.
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