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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

    ()

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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Bibliographic 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
Date of revision:
Handle: RePEc:use:tkiwps:0714

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Related research

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

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Cited by:
  1. Subal C. Kumbhakar & Raquel Ortega-Argilés & Lesley Potters & Marco Vivarelli & Peter Voigt, 2010. "Corporate R&D and firm efficiency: Evidence from Europe’s top R&D investors," JRC-IPTS Working Papers on Corporate R&D and Innovation 2010-11, Institute of Prospective Technological Studies.

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