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Growth determinants of economic potential. The Polish case (in Ukraine)

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  • W. Welfe

Abstract

The author builds a new long-term yearly model W8-D for Polish economy whose basis is Cobb-Duglas productive function directed to the generation of potential GDP and total factor productivity (TFP). TFP growth is related to increase in domestic and external capital, as well as human capital. All those changes were subseequently endogenized. The paper outlines a theoretical basis which starts from Solow's extended productive function and allows to arrive in the theory of endogenous growth. The empirical part of the paper shows estimated values of productive function parameters for Poland (as example were taken data of 1966-1998). The author also calculates potential GDP. Further calculations show that its dynamics was chiefly influenced by the growth of primary production factors, being TFP growth rate only responsible for 10-30% of potential GDP growth. Overall influence of R&D volume constitutes about ¾ of TFP growth, and the decisive factor here is imported technology, while the influence of human factor is less than ¼ of TFP growth.

Suggested Citation

  • W. Welfe, 2002. "Growth determinants of economic potential. The Polish case (in Ukraine)," Economy and Forecasting, Valeriy Heyets, issue 4, pages 9-34.
  • Handle: RePEc:eip:journl:y:2008:i:1:p:9-34
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