Publication: It's Not Factor Accumulation : Stylized Facts and Growth Models
Date
2001-05
ISSN
Published
2001-05
Author(s)
Easterly, William
Levine, Ross
Abstract
The article documents five stylized
facts of economic growth: (1) the 'residual'
(total factor productivity, tfp) rather than factor
accumulation accounts for most of the income and growth
differences across countries; (2) income diverges over the
long run; (3) factor accumulation is persistent while growth
is not, and the growth path of countries exhibits remarkable
variation; (4) economic activity is highly concentrated,
with all factors of production flowing to the richest areas;
and (5) national policies are closely associated with
long-run economic growth rates. These facts do not support
models with diminishing returns, constant returns to scale,
some fixed factor of production, or an emphasis on factor
accumulation. However, empirical work does not yet
decisively distinguish among the different theoretical
conceptions of tfp growth. Economists should devote more
effort toward modeling and quantifying tfp.
Citation
“Easterly, William; Levine, Ross. 2001. It's Not Factor Accumulation : Stylized Facts and Growth Models. World Bank Economic Review. © Washington, DC: World Bank. http://openknowledge.worldbank.org/handle/10986/17440 License: CC BY-NC-ND 3.0 IGO.”
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World Bank Economic Review
1564-698X
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