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Is Newer Always Better? A Reinvestigation Of Productivity Dynamics

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Understanding the drivers of productivity remains one of the most sought after phenomena in economics. The ability to create produce more from less resources is undoubtedly appealing. Using recently updated Penn World Table data, we investigate to what degree previous results using a popular productivity decomposition are maintained. We find that, contrary to conclusions from earlier work, technical efficiency (catching up) played a more pronounced role in the global increase in productivity over the 1965-1990 period. We also find a larger effect for technical change than earlier work and a far lesser role for capital deepening. This suite of results augurs the coming information age that placed less weight on physical capital to createand sustain wealth. Taken together our findings here suggest that as data collection, its quality and evaluation methods evolve, so too will our understanding of productivity dynamics.

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  • Yan Meng & Christopher F. Parameter & Valentin Zelenyuk, 2021. "Is Newer Always Better? A Reinvestigation Of Productivity Dynamics," CEPA Working Papers Series WP062021, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:160
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    File URL: https://economics.uq.edu.au/files/28070/WP062021.pdf
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    Cited by:

    1. Laurens Cherchye & Bram De Rock & Dieter Saelens & Marijn Verschelde, 2022. "Productive Efficiency Analysis with Incomplete Output Information," Working Papers ECARES 2022-21, ULB -- Universite Libre de Bruxelles.

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