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Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004

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  • Flory Dieck-Assad

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  • Ernesto Peralta

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Abstract

Gross domestic product per remunerated labor (GDP/L), known as the Mexican average productivity, grew very rapidly from 1965 to 1979; it increased at an average annual rate of 3.7%. But from 1979 through 2004, productivity stagnated with an average annual growth rate of only 0.19%. The hypothesis is that from 1965 through 1979, productivity increased rapidly because of concomitant growth in the utilized capital and energy per worker and the improvements in technology. After 1979, the productivity growth came to a standstill because of a slowdown in investment and stagnation in the utilized capital and energy per worker due to the sharply rising energy prices. The tool chosen to test this hypothesis is an aggregate Cobb-Douglas production function characterized by technical change embodied in the gross investment in new machinery and equipment. The estimation of this model shows energy as a cornerstone of productivity growth independent of capital and new technology. Copyright Springer-Verlag 2013

Suggested Citation

  • Flory Dieck-Assad & Ernesto Peralta, 2013. "Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004," Empirical Economics, Springer, vol. 44(2), pages 563-590, April.
  • Handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:563-590
    DOI: 10.1007/s00181-012-0557-5
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    File URL: http://hdl.handle.net/10.1007/s00181-012-0557-5
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    References listed on IDEAS

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    Cited by:

    1. Pablo-Romero, María del P. & Sánchez-Braza, Antonio, 2015. "Productive energy use and economic growth: Energy, physical and human capital relationships," Energy Economics, Elsevier, vol. 49(C), pages 420-429.

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