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Do Technology and Efficiency Differences determine Productivity?

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Author Info
Michael Koetter ()
Jaap Bos ()
Claire Economidou ()
James Kolari ()

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Abstract

This paper investigates the forces driving output growth, namely technological, efficiency, and input changes, in 80 countries over the period 1970-2000. Relevant past studies typically assume that: (i) countries use resources efficiently, and (ii) the underlying production technology is the same for all countries. We address these issues by estimating a stochastic frontier model, which explicitly accounts for inefficiency, augmented with a latent class structure, which allows for production technologies to differ across groups of countries. Membership of these groups is estimated, rather than determined ex ante. Our results indicate the existence of three groups of countries. These groups differ significantly in terms of efficiency levels, technological change, and the development of capital and labor elasticities. However, a consistent finding across groups is that growth is driven mainly by factor accumulation (capital deepening).

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Publisher Info
Paper provided by Utrecht School of Economics in its series Working Papers with number 07-14.

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Length: 28 pages
Date of creation: May 2007
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Handle: RePEc:use:tkiwps:0714

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Related research
Keywords: Total Factor Productivity; Latent Class; Stochastic Frontier; Efficiency; Growth;

Find related papers by JEL classification:
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models

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