What have we learned from a decade of empirical research on growth? It's Not Factor Accumulation: Stylized Facts and Growth Models

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ID: 292183
2001
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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. (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.
Reference Key
openalex_W2058016438 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors William Easterly, Ross Levine
Journal The World Bank Economic Review
Year 2001
DOI
10.1093/wber/15.2.177
URL
https://doi.org/10.1093/wber/15.2.177
Keywords Keywords not found

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