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Total Factor Productivity, Human Capital and Outward Orientation: Differences by Stage of Ddevelopment and Geographic Regions

  • Stephen M. Miller

    (University of Nevada and University of Connecticut)

  • Mukti P. Upadhyay

    (Eastern Illinois University)

Do openness and human capital accumulation promote economic growth? While intuition argues yes, the existing empirical evidence provides mixed support for such assertions. We examine Cobb-Douglas production function specifications for a 30-year panel of 83 countries representing all regions of the world and all income groups. We estimate and compare labor and capital elasticities of output per worker across each of several income and geographic groups, finding significant differences in production technology. Then we estimate the total factor productivity series for each classification. Using determinants of total factor productivity that include, among many others, human capital, openness, and distortion of domestic prices relative to world prices, we find significant differences in results between the overall sample and sub-samples of countries. In particular, a policy of outward orientation may or may not promote growth in specific country groups. even if geared to reducing price distortion and increasing openness. Human capital plays a smaller role in enhancing growth through total factor productivity.

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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2002-33.

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Length: 37 pages
Date of creation: Jul 2002
Date of revision:
Handle: RePEc:uct:uconnp:2002-33
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Web page: http://www.econ.uconn.edu/

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  1. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March.
  2. Miller, Stephen M. & Upadhyay, Mukti P., 2000. "The effects of openness, trade orientation, and human capital on total factor productivity," Journal of Development Economics, Elsevier, vol. 63(2), pages 399-423, December.
  3. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
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  6. Gregory Mankiw, 1995. "The Growth of Nations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 275-326.
  7. Miller, Stephen M. & Upadhyay, Mukti P., 2002. "Total factor productivity and the convergence hypothesis," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 267-286, June.
  8. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  9. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
  10. Brock,W.A. & Durlauf,S.N., 2000. "Growth economics and reality," Working papers 24, Wisconsin Madison - Social Systems.
  11. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  12. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  13. Bruno, Michael & Easterly, William, 1995. "Inflation crises and long-run growth," Policy Research Working Paper Series 1517, The World Bank.
  14. Pack, Howard & Page, John Jr., 1994. "Accumulation, exports, and growth in the high-performing Asian economies," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 199-235, June.
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  16. Kim, H Youn, 1992. "The Translog Production Function and Variable Returns to Scale," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 546-52, August.
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