It's Not Factor Accumulation : Stylized Facts and Growth Models

By William R. Easterly, Ross Levine. 2001

1,462 citations recorded by the source corpus.

We document five stylized facts of economic growth. (1) The "residual" rather than factor accumulation accounts for most of the income and growth differences across nations. (2) Income diverges over the long run. (3) Factor accumulation is persistent while growth is not persistent and the growth path of countries exhibits remarkable variation across countries. (4) Economic activity is highly concentrated, with all factors of production flowing to the richest areas. (5) National policies closely associated with long-run economic growth rates. We argue that these facts do not support models with diminishing returns, constant returns to scale, some fixed factor of production, and that highlight the role of factor accumulation. Empirical work, however, does not yet decisively distinguish among the different theoretical conceptions of "total factor productivity growth." Economists should devote more effort towards modeling and quantifying total factor productivity.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5664d7fd7204ffa75686108b97c02d202f0efd06

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Citations in the corpus

Does FDI Cause Development? The Ambiguity of the Evidence and Why it Matters (2012, background): “Studies by Klenow and Rodriguez-Clare (1997), Hall and Jones (1999) and Easterly and Levine (2001) among others have demonstrated that total factor productivity growth explains far more of the variation in cross country per capita income growth than the more traditional drivers of growth such as…”
Half a World: Regional Inequality in Five Great Federations (2005, background): “A different view has been proposed more recently within the context of the new economic geography school (Krugman & Venables, 1995) and endogenous growth (Romer 1986; see also a recent review by Easterly & Levine 2001).”
ON T HE EMPIRICS OF FOREIGN A ID AND G ROWTH (2004, neutral): “Recent research on the proximate sources of growth suggests that the bulk of the differences in income and growth, between “rich” and “poor” economies, is due to total factor productivity (see Klenow and Rodrigues-Clare, 1997; Easterly and Levine, 2001).”
Bank-Based or Market-Based Financial Systems: Which is Better? (2002, neutral): “11 I assessed the empirical link between financial structure and the individual sources of growth: total factor productivity growth, physical capital accumulation, and private saving rates using data from Easterly and Levine (2001).”
The Failure of Development Aid (2003, background): “Despite the steady flow of development aid to poor countries in the last 50 years, the results have been somewhat disappointing, as noted by Bovard (1986), Burnside and Dollar (2000), the World Bank (1998), Vásquez (1998), Easterly (2001), and Easterly and Levine (2001).”
Is Corruption an Efficient Grease (2010, positive): “(1999b) or Easterly and Levine (2003).”
Determinants of total factor productivity : a literature review (2007, background): “It is not entirely obvious where the Easterly and Levine (2002) paper should be placed, since its purpose is to test three hypotheses, namely, how important the hypotheses for”