Macroeconomic Determinants of Total Factor Productivity: An Analysis on the Example of OECD Countries

Year 2022, , 293 - 328, 30.06.2022

Nadide Yiğiteli , Fahriye Öztürk

https://doi.org/10.26650/ISTJECON2022-1086903

Abstract

This study examines the macroeconomic determinants of total factor productivity (TFP), a critical factor for sustainable economic growth, within the scope of the dataset, including the 1990–2017 period and 27 OECD countries. The primary goal is to provide an up-to-date perspective on the literature within the scope of the analyzed period and country and provide an infrastructure for policy sets that will contribute to long-term economic growth. We use a two-stage empirical application in this context. First, the economic stability index, innovation index, technology diffusion index, education index, and economic freedom index are computed. Subsequently, the effect of these variables on TFP is investigated using panel regression methods. Results reveal that the technology diffusion index, which depicts the mechanisms of technology transfer from country to country, is the most important factor determining TFP. This variable is followed by the education and innovation indices. Another important finding of the study is that the economic stability and freedom indices have a significant impact on TFP. However, the magnitude of these effects is smaller than that of other variables.

Keywords

Productivity, Technology, Growth

Toplam Faktör Verimliliğinin Makroekonomik Belirleyenleri: OECD Ülkeleri Örneğinde Bir Analiz

Abstract

Çalışmada, 1990-2017 dönemini ve 27 OECD ülkesini içeren veri seti kapsamında sürdürülebilir ekonomik büyüme için temel bir etken olan toplam faktör verimliliğinin (TFV) makroekonomik belirleyicileri analiz edilmektedir. Çalışmanın amacı, analiz edilen dönem ve ülke kapsamında literatüre güncel bir bakış açısı sunmak ve sürdürülebilir ekonomik büyümeye katkı sağlayacak politika setlerine yönelik altyapı sağlamaktır. Bu kapsamda, çalışma iki aşamalı bir ampirik uygulama içermektedir. İlk olarak, ekonomik istikrar endeksi, yenilik endeksi, teknoloji yayılım endeksi, eğitim endeksi ve ekonomik özgürlük endeksi hesaplanmakta olup sonraki aşamada ise panel regresyon yöntemleri kullanılarak bu değişkenlerin TFV üzerindeki etkisi araştırılmaktadır. Bulgular, TFV’yi belirleyen en önemli faktörün teknolojinin ülkeden ülkeye transfer mekanizmalarını gösteren teknoloji yayılım endeksi olduğunu göstermektedir. Bu değişkeni, eğitim ve yenilik endeksleri ve takip etmektedir. Ekonomik istikrar endeksi ile ekonomik özgürlük endeksinin de TFV üzerinde anlamlı bir etkisinin bulunduğu ancak bu etkilerin büyüklüğünün diğer değişkenlere göre daha sınırlı olduğu çalışmanın diğer önemli bulgularıdır.

Keywords

Verimlilik, Teknoloji, Büyüme

References

• Abel, A., Bernanke, B. & Croushore, D. (2008). Macroeconomics (6th ed). Boston: Pearson, Addison-Wesley.
• Aghion, P., Bacchetta, P., Ranciere, R., & Rogoff, K. (2009). Exchange rate volatility and productivity growth: The role of financial development. Journal of Monetary Economics, 56(4), 494-513.
• Aguiar, D., Costa, L. & Silva, E. (2017). An attempt to explain differences in economic growth: A stochastic frontier approach. Bulletin of Economic Research, 4, E42-E65.
• Ahmed, T. & Bhatti, A. A. (2020). Measurement and determinants of multi‐factor productivity: A survey of literature. Journal of Economic Surveys, 34(2), 293-319.
• Akhremenko, A., Petrov, A., & Yureskul, E. (2019). Institutions, productivity change, and growth. In S. Smirnov, A. Ozyildirim, and P. Picchetti (eds.), Business Cycles in BRICS (pp. 29–54). Berlin–Heidelberg: Springer.
• Alvi, S. & Ahmed, A. M. (2014). Analyzing the ımpact of health and education on total factor productivity: A panel data approach. Indian Economic Review, 109-123.
• Anand, S., & Sen, A. (1993). Human development index: Methodology and measurement. United Nations Development Programme Occasional Papers No. 12, New York: United Nations Development Programme.
• Arisoy, I. (2012). The impact of foreign direct investment on total factor productivity and economic growth in Turkey. The Journal of Development Areas, 46(1), 17–29.
• Baltabaev, B. (2013). Foreign direct investment and total factor productivity growth: New macro evidence (Discussion Paper No. 27/13). Australia: Department of Economics, Business and Economics, MONASH University.
• Baltagi, B. H. (2001). Econometric analysis of panel data (2nd ed). New York: Wiley.
• Barro, R. J. & Lee, J. W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184-198. Web: http://www.barrolee.com/ Updated: 2018.
• Benhima, K. (2012). Exchange rate volatility and productivity growth: The role of liability dollarization. Open Economies Review, 23(3), 501-529.
• Berg, A., & Krueger, A. (2003). Trade, growth, and poverty: A selective survey. IMF Working Paper, No. 03/30.
• Blackwell III, J. L. (2005). Estimation and testing of fixed-effect panel-data systems. The STATA Journal, 5(2), 202-207.
• Blanchard, O. (2003). Macroeconomics (3rd ed). Massachusetts: Prentice Hall.
• Clark, P. K. (1982). Inflation and the productivity decline. The American Economic Review, 72(2), 149-154.
• Coe, D.T. & Helpman, E. (1995). International R&D spillovers. European Economic Review, 39(5), 859–887.
• Coelli, T.J., Rao, D. S. P., O’Donnell, C. J. & Battese, G.E. (2005). An introduction to efficiency and productivity analysis (2nd ed). Springer.
• Diallo I. A. (2012). The effect of real exchange rate volatility on productivity growth. MPRA Paper, 36171, University of Munich Germany.
• Drukker, D. M. (2003). Testing for serial correlation in linear panel-data models. The Stata Journal, 2(3), 1-10.
• Easterly, W. &Levine, R. (2001). What have we learned from a decade of empirical research on growth? It's not factor accumulation: Stylized facts and growth models. The World Bank Economic Review, 15(2), 177-219.
• Egert, B. (2016). Regulation, institutions, and productivity: New macroeconomic evidence from OECD countries. American Economic Review, 106(5), 109–113.
• Freeman, C. & Soete, L. (2003). Yenilik iktisadı (Çev. E. Türkcan). TUBİTAK Yayınları.
• Griffith, R., Redding, S., & Reenen, J. V. (2004). Mapping the two faces of R&D: Productivity growth in a panel of
• OECD industries. Review of Economics and Statistics, 86(4), 883-895.
• Gronroos, C. & Ojasalo, K. (2004). Service productivity: Towards a conceptualization of the transformation of inputs into economic results in services. Journal of Business Research, 57(4), 414-423.
• Grosskopf, S. (1993). Efficiency and productivity, In H. 0. Fried, C. A. K. Lovell and S. S. Schmidt (Eds), The Measurement of Productive Eficiency. New York: Oxford University Press, 160-194.
• Grossman, G. M. & Helpman, E. (1991). Trade, knowledge spillovers, and growth. European Economic Review, 35(2-3), 517-526.
• Hall, R. E. & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others?. The Quarterly Journal of Economics, 114(1), 83-116.
• Hodrick, R. & Prescott, E. C. (1997). Postwar U.S. business cycles: An empirical investigation. Journal of Money, Credit, and Banking, 29(1), 1–16.
• Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. The Stata Journal, 7(3), 281-312.
• Isaksson, A., (2007). Determinants of total factor productivity: A literature review. United Nations Industrial Development Organization.
• Ismihan, M. & Metin-Ozcan, K. (2009). Productivity and growth in an unstable emerging market economy: The case of Turkey, 1960-2004. Emerging Markets Finance and Trade, 45(5), 4-18.
• Jeanneney, S. G. & Hua, P. (2003). Real exchange rate and productivity in China. Centre d'Etudes et de Recherches sur le Développement International.
• Jones, C. (2001). İktisadi büyümeye giriş (Çev. Ş. Ateş, ve İ. Tuncer). İstanbul: Literatür Yayıncılık.
• Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90(1), 1-44.
• Kendrick, J. (1956). Productivity trends: Capital and labor”. In Productivity Trends: Capital and Labor. NBER. 3-23.
• Kennedy, P. (2008). A guide to econometrics. Oxford: Willey Blackwell.
• Kowalski, P. A. (2003). Nominal and real convergence in alternative exchange rate regimes in transition countries: Implications for the EMU Accession. CASE Network Studies and Analyses, (270).
• Kök, R. & Deliktaş, E. (2003). Endüstri iktisadında verimlilik ölçme ve strateji geliştirme teknikleri. İzmir: DEÜ İİBF Yayınları, Yayın Karar No.25-8/1.
• Kutan, A. M. & Yiğit, T. M. (2009). European integration, productivity growth and real convergence: Evidence from the new member states. Economic Systems, 33(2), 127-137.
• Lafrance, R. & Schembri, L. L. (2000). The exchange rate, productivity, and the standard of living. Bank of Canada Review, Winter, 17-28.
• Levin, A., C.-F. Lin & C.-S. J. Chu. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108, 1–24.
• Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42
• Mankiw, N. G., Phelps, E. S. & Romer, P. M. (1995). The growth of nations. Brookings Papers on Economic Activity, 1, 275-326.
• Mankiw, N.G., Romer, D. & Weil, D.N. (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2), 407–437.
• Miller, S. M. & Upadhyay, M. P. (2002). Total factor productivity, human capital and outward orientation: Differences by stage of development and geographic regions. University of Connecticut Economics Working Papers, 33.
• Miller, T., Kim, B. A. & Roberts, M. J. (2021). 2021 Index of economic freedom. Washington, DC: Heritage Foundation.
• North, D. C., & Thomas, R. P. (1973). The rise of the western world: A new economic history. Cambridge University Press.
• OECD. (2018). Oslo Manual 2018. Web: https://www.oecd-ilibrary.org [Erişim:01/05/2022].
• Olomola, P. A. & Osinubi, T. T. (2018). Determinants of total factor productivity in Mexico, Indonesia, Nigeria, and Turkey (1980–2014). Emerging Economy Studies, 4(2), 192-217.
• Park, J. (2010). Projection of long-term total factor productivity growth for 12 Asian economies. Asian Development Bank Economics Working Paper Series, (227).
• Pedroni, P. (2004). Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20(3), 597-625.
• Pesaran, M. H. (2003). A simple panel unit root test in the presence of cross section dependence. Web: https://bit.ly/329NmVX [Erişim: 27/09/2019].
• Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. IZA Discussion Paper 1240. Web: http://repec.iza.org/dp1240.pdf [Erişim: 27/09/2019].
• Polterovich, V. & Popov, V. (2003). Accumulation of foreign exchange reserves and long term growth. MPRA Paper 20069, New Economic School, Moscow.
• Puskarova, P., and Piribauer, P. (2016). The impact of knowledge spillovers on total factor productivity revisited: New evidence from selected European capital regions. Economic Systems, 40(3), 335-344.
• Ramirez, M. D. (2006). Does foreign direct ınvestment enhance labor productivity growth in Chile? A co-integration analysis. Eastern Economic Journal, 32(2), 205-220.
• Reppas, P. A. & Christopoulos, D. K. (2005). The export-output growth nexus: Evidence from African and Asian countries. Journal of Policy Modeling, 27(8), 929-940.
• Romer, P. M. (1989). Human capital and growth: Theory and evidence. National Bureau of Economic Research, No. w3173.
• Romer, P.M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94, 1002–1037.
• Schumpeter, J. (1928). The ınstability of capitalism. The Economic Journal, 38(151), 361. https://doi:10.2307/2224315
• Schumpeter, J.A., (1932). Development, translated by M.C. Becker and T. Knudsen. J. Econ. Lit. XLIII, 108-120, with an introduction by M.C. Becker, H.U. Eßlinger, U. Hedtke and T. Knudsen.
• Schumpeter, J. (1934). The theory of economic development (Trans. R. Opie). Cambridge, MA: Harvard University Press.
• Solow, R. M. (1956). A contribution to the theory of economic growth. Journal of Economics, 70(1), 65-94.
• Solow, R. M. (1957). Technical change and the aggregate production function. Review of Economics and Statistics, 39(3), 312-320.
• Stiroh, K. J. (2001). What drives productivity growth?. Economic Policy Review, 16, 37–59.
• Stock, J. H. & Watson, M. W. (2007). Introduction to econometrics (2nd ed.). Boston, MA: Pearson/Addison-Wesley.
• Stone, S. & Shepherd B. (2011). Dynamic gains from trade: The role of intermediate inputs and equipment imports. OECD Trade Policy Working Papers, No. 110.
• Tebaldi, E. (2016). The dynamics of total factor productivity and institutions. Journal of Economic Development, 41(4), 1–25.
• Tochkov, K. (2020). Regional real exchange rates and growth: Evidence from resource‐based regional economies. Review of International Economics, 1–15.
• UNDP. (2020). Human Development Reports Technical Note. Available at: http://hdr.undp.org/sites/default/files/hdr2020_technical_notes.pdf, [Erişim:27/09/2020].
• Venturini, F. (2015). The modern drivers of productivity. Research Policy, 44(2), 357–369.
• Westerlund, J. (2005). New simple tests for panel cointegration. Econometric Reviews, 24(3), 297-316.
• Woo, J. (2009). Productivity growth and technological diffusion through foreign direct investment. Economic Inquiry, 47(2), 226–248.
• Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. Cambridge, Massachusetts: The MIT Press.
• Wooldridge, J. M. (2003). Introductory econometrics: A modern approach (2nd ed). New York: South- Western.
• Yiğiteli, N. & Öztürk, F. (2021). OECD ülkelerinde toplam faktör verimliliği: Stokastik sınır yaklaşımı ile bir panel veri uygulaması. Ankara Hacı Bayram Veli Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 23(3), 1108-1147.
• Yiğiteli, N. & Turan, D. (2018). Ani duruş sorunu, doğrudan yabancı yatırımlar ve savunma sanayi özelinde bir değerlendirme. Bulletin of Economic Theory and Analysis, 3(2), 79-108.