71st International Atlantic Economic Conference

March 16 - 19, 2011 | Athens, Greece

Determinants of Total Factor Productivity

Friday, 18 March 2011: 17:00
Wladyslaw Welfe, Ph.D , Institute of Econometrics and Statistics, University of Lodz, 90-214 Lodz, Poland
Waldemar Florczak, Ph.D. , Institute of Econometrics, University of lodz, Lodz, Poland
Total factor productivity (TFP) is commonly regarded as an appropriate empirical representation of technological and organizational progress. It covers the impacts of knowledge capital. TFP broad notion includes human capital as well as the effects of progress in production and management.

The measurement problems of TFP is discussed, including the Solow residual approach, calibrating the parameters of production functions, etc. The role of knowledge capital resulting from domestic R&D and R&D transfer from abroad is distinguished. The R&D transfer is analyzed via direct and indirect channels. These are imports of intermediate and investment goods. The R&D expenditures of leading industrial countries build the foreign knowledge capital. The weight attached to particular countries are broadly discussed, going beyond common approach.

The impacts of human capital may be understood more broadly than to cover the educational changes only. The learning by doing and the health conditions represented by the life expectancy are introduced as additional determinants. However, the social capital, regarded as a new determinant, may be hard to quantify.

The above discussions are illustrated by the results of the estimations based on the long-term W8D-2008 model of the Polish economy.