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The Role of Total Factor Productivity Growth in Middle-Income Countries

Author

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  • Kim, Jungsuk

    (Sogang University)

  • Park , Jungsoo

    (Sogang University)

Abstract

We examine the importance of total factor productivity (TFP) growth in middle-income countries based on cross-country panel data for the period 1975–2014. We find that TFP growth contributed significantly to a country’s upward transition from middle-income to high-income country group. The TFP growth model reveals that the catch-up effect, human capital, smaller population, weak currency, and research and development (R&D) growth are significant sources of TFP growth. We do not find a systematic difference in the TFP growth models for middle-income countries. In analyzing the role of factors influencing TFP growth at different income stages, strengthening innovative activities and building innovative capacities are important in overcoming the challenges that middle-income countries face when transitioning to the high-income group. Governments of upper-middle-income countries need to initiate reform to motivate innovation by optimizing national R&D systems, and redesigning the educational system to target promoting innovation.

Suggested Citation

  • Kim, Jungsuk & Park , Jungsoo, 2017. "The Role of Total Factor Productivity Growth in Middle-Income Countries," ADB Economics Working Paper Series 527, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0527
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    References listed on IDEAS

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    Cited by:

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    2. Samatas, Andreas & Makrominas, Michalis & Moro, Andrea, 2019. "Financial intermediation, capital composition and income stagnation: The case of Europe," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 273-289.
    3. Yashasvi PANDEY & C.R. BISHNOI, 2022. "A cross country analysis of components of economic growth through the growth accounting approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(633), W), pages 89-102, Winter.
    4. Chunhua Lu & Hong Li, 2023. "Have China’s Regional Carbon Emissions Trading Schemes Promoted Industrial Resource Allocation Efficiency? The Evidence from Heavily Polluted Industries at the Provincial Level," Sustainability, MDPI, vol. 15(3), pages 1-20, February.
    5. Hao-Chang Yang & Chun-Ping Chang & Sahminan & Arnita Rishanty, 2021. "Monetary Policy, Innovation Efficiency, And Total Factor Productivity," Working Papers WP/15/2021, Bank Indonesia.
    6. Оразалин Рустем // Orazalin Rustem, 2021. "Оценка влияния финансов на экономический рост через призму инвестиций, кредитов и денежной массы // Assessing the influence of finance on economic growth through the prism of investments, credits and ," Working Papers #2021-8, National Bank of Kazakhstan.
    7. Das, Gouranga G. & Ginting, Edimon & Horridge, Mark & Yamano, Takashi, 2023. "Growth Constraints and Structural Diversification for Kyrgyzstan Economy: Policy Analysis of Key Reforms and its Implications," GLO Discussion Paper Series 1250, Global Labor Organization (GLO).
    8. Prajukta Tripathy & Pragyanrani Behera & Bikash Ranjan Mishra, 2023. "Study of linkages between productivity, export, and outward foreign direct investment: An empirical perspective of Indian manufacturing industries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1527-1548, April.
    9. Haidong Yu & Juanjuan Zhao, 2020. "The Impact of Environmental Conditions on Urban Eco-Sustainable Total Factor Productivity: A Case Study of 21 Cities in Guangdong Province, China," IJERPH, MDPI, vol. 17(4), pages 1-21, February.
    10. Taehwan Rhee & Jacob Wood & Jungsuk Kim, 2022. "Digital Transformation as a Demographic and Economic Integrated Policy for Southeast Asian Developing Countries," Sustainability, MDPI, vol. 14(5), pages 1-19, March.
    11. Law, Siong Hook & Naseem, N.A.M. & Lau, Wei Theng & Trinugroho, Irwan, 2020. "Can innovation improve income inequality? Evidence from panel data," Economic Systems, Elsevier, vol. 44(4).

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    More about this item

    Keywords

    economic growth; human capital; middle-income countries; research and development; total factor productivity;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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