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Growth Accounting for Some Selected Developing, Newly Industrialized and Developed Nations from 1966-2000: A Data Envelopment Analysis

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  • Somesh Kumar Mathur

    (Department of Economics,Jamia Millia Islamia)

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    Abstract

    We work out technical efficiency levels of 29 countries consisting of some selected South Asian, East Asian and EU countries using data envelopment analysis. Luxembourg has an efficiency score of one(most efficient) in all the years .Netherlands also has an efficiency score of one in 1966,1971,1976 and 1981.Japan,UK,Belgium,Ireland,Indonesia,Spain and Germany has an efficiency score of one in at least one of the years from 1966 to 2000.In the year 2000 though mean efficiency levels(without including life expectancy as input) of South Asian countries is higher than the European Union Countries and East Asian countries. Japan has the highest average efficiency followed by Hong Kong in the East Asian region in the period 1966-2000. We also decompose labor productivity growth into components attributable to technological changes (shifts in the overall production frontier), technological catch up or efficiency changes(movement towards or away from the frontier),capital accumulation(movement along the frontier) and human capital accumulation( proxied by life expectancy).The overall production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections. Growth accounting results tend to convey that for the East Asian and the South Asian countries efficiency changes(technological catch up) have contributed the most, while for the European countries it is the technical changes which has contributed to labour productivity changes between 1966-2000. We also analyze the evolution of cross country distribution for the 29 countries included in our sample using Kernel densities. It seems that there are other factors like trade openness,quality of governments,population rate of growth, savings rate, corruption perception indices, rule of law index, social capital and trust variables, formal and informal rules governing the society, among others, rather than the ones that are included below for the growth accounting exercise, which are primarily responsible for the existence of bimodal labour productivity distribution for countries included in our sample. However, from this growth accounting exercise, we do find that there is convergence in statistical terms of efficiency changes and human capital accumulation across countries of the EU, South Asian and East Asian regions.

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    Bibliographic Info

    Paper provided by EconWPA in its series GE, Growth, Math methods with number 0412003.

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    Length: 34 pages
    Date of creation: 22 Dec 2004
    Date of revision:
    Handle: RePEc:wpa:wuwpge:0412003

    Note: Type of Document - doc; pages: 34
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    Web page: http://128.118.178.162

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    Keywords: data envelopment analysis; growth accounting; technical efficiency; efficiency change; technological change; capital accumulation; human capital accumulation; kernel smoothing; cross country labor productivity distribution and counterfactual distributions;

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    1. Bernard, A.B. & Durlauf, S.N., 1994. "Interpreting Tests of the Convergence Hypothesis," Working papers 9401r, Wisconsin Madison - Social Systems.
    2. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander, 1995. "North-South R&D Spillovers," CEPR Discussion Papers 1133, C.E.P.R. Discussion Papers.
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    7. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
    8. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
    9. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
    10. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April.
    11. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
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