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Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004

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  • Flory Dieck-Assad

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  • Ernesto Peralta

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    Abstract

    Gross domestic product per remunerated labor (GDP/L), known as the Mexican average productivity, grew very rapidly from 1965 to 1979; it increased at an average annual rate of 3.7%. But from 1979 through 2004, productivity stagnated with an average annual growth rate of only 0.19%. The hypothesis is that from 1965 through 1979, productivity increased rapidly because of concomitant growth in the utilized capital and energy per worker and the improvements in technology. After 1979, the productivity growth came to a standstill because of a slowdown in investment and stagnation in the utilized capital and energy per worker due to the sharply rising energy prices. The tool chosen to test this hypothesis is an aggregate Cobb-Douglas production function characterized by technical change embodied in the gross investment in new machinery and equipment. The estimation of this model shows energy as a cornerstone of productivity growth independent of capital and new technology. Copyright Springer-Verlag 2013

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    Bibliographic Info

    Article provided by Springer in its journal Empirical Economics.

    Volume (Year): 44 (2013)
    Issue (Month): 2 (April)
    Pages: 563-590

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    Handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:563-590

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    Related research

    Keywords: Energy; Mexican aggregate labor productivity; Cobb-Douglas production model; C010; C020; C120; C130; C510; D240; E230; N160; O100; O110; O130; O400; O490; Q430;

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    1. Jorgenson, Dale W, 1984. "The Role of Energy in Productivity Growth," American Economic Review, American Economic Association, vol. 74(2), pages 26-30, May.
    2. William D. Nordhaus, 1980. "Oil and Economic Performance in industrial Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 11(2), pages 341-400.
    3. Ali Alichi & Rabah Arezki, 2009. "An Alternative Explanation for the Resource Curse," IMF Working Papers 09/112, International Monetary Fund.
    4. Dale W. Jorgenson, 1984. "The Role of Energy in Productivity Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 11-26.
    5. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
    6. Hamilton, James D, 1988. "A Neoclassical Model of Unemployment and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 593-617, June.
    7. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, vol. 54(2-3), pages 175-195, August.
    8. Moroney, John R., 1992. "Energy, capital and technological change in the United States," Resources and Energy, Elsevier, vol. 14(4), pages 363-380, December.
    9. Edelstein, Paul & Kilian, Lutz, 2009. "How sensitive are consumer expenditures to retail energy prices?," Journal of Monetary Economics, Elsevier, vol. 56(6), pages 766-779, September.
    10. Anca Cotet & Kevin K. Tsui, 2010. "Resource Curse or Malthusian Trap? Evidence from Oil Discoveries and Extractions," Working Papers 201001, Ball State University, Department of Economics, revised Mar 2010.
    11. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
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