By Hafiz Akhand
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32) implies that TFP growth is a residual of the rate of growth of output per worker qˆt − ˆt after deducting the contributions of human and physical capital accumulation. 32) are not directly observable. Under the assumption of competitive factor markets, however, the output elasticities are equal to the income shares of factor inputs. 25 However, reliable measures of factor income shares are not available for most developing countries. The World Bank study therefore estimates the output elasticities sK and sE directly using a simple, cross-country production function.
By contrast, the accumulation view (from here on, X view) insists that X is more important. Establishing which view is correct is an essential step towards extracting lessons from the East Asian growth experience because the positive and normative implications of the A view can be dramatically different from those of the X view. In this chapter we re-examine the debate on the relative importance of productivity growth versus physical and human capital accumulation in explaining the exceptionally high rate of output growth in East Asia.
Consequently, a shift from long-lived capital (for example, buildings) to short-lived capital (for example, machinery) would account for part of the output growth. 11). 14 In particular, they introduce a discrete-time approximation to the Divisia index derived from the Tronqvist index. 11) with the average between-period shares. Thus, in the Tronqvist approximation, input Xi s discrete-time income share between periods t and t − 1 is s¯i ≡ (sit + sit−1 )/2. As well, continuoustime growth rates are replaced by their discrete-time counterparts.
Economic Development in Pacific Asia by Hafiz Akhand