The Sources of Global Economic Growth: Comparing the Relative Roles of Productivity and Factor Accumulation in the World Economy and Its Distribution Across Countries

• Activity Number: 387
• Type: Topic Contributed
• Date/Time: Tuesday, August 5, 2014 : 2:00 PM to 3:50 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Abdul Erumban and Bart van Ark*+
• Companies: The Conference Board and The Conference Board
• Keywords: productivity ; factor accumulation ; sources of growth ; international comparison

Abstract

In the past two decades, the global economy has witnessed substantial churning in economic activity due to a number of dynamics, including the emergence of some of the developing countries such as China and India, the increasing role of information and communication technology and the recent financial crisis the global economy has witnessed. This paper aims to understand the proximate sources of differences in growth rates of labor productivity across countries in the rapidly changing global economic environment. For this analysis, we use the Conference Board Total Economy Database (TED), which has been constructed for international comparison of output and productivity. Using a growth accounting methodology, we first identify the sources of labor productivity growth in terms of factor accumulation and total factor productivity for about 125 countries from 1980-2013. Subsequently, we decompose the variation in labor productivity growth across countries into contributions from variations in factor accumulation and in total factor productivity using a variance decomposition analysis.