Growth Accounting and Growth Processes

18 Pages Posted: 15 Feb 2006

See all articles by Jahangir Aziz

Jahangir Aziz

International Monetary Fund (IMF) - Asia and Pacific Department

Date Written: October 1996

Abstract

The standard growth accounting framework, which weights various inputs by their factor shares to measure their contributions to output growth, is known to underestimate the contribution of inputs in the presence of externalities and increasing returns. This paper develops a model in which, in the absence of such departures from the standard neoclassical framework, growth can occur through either embodied technological progress or firms replication of existing technology. The standard growth accounting framework fails to distinguish between these contrasting development processes. This failure thus reveals another limitation to the use of growth accounting in identifying the processes of economic developments.

JEL Classification: O11, O47

Suggested Citation

Aziz, Jahangir, Growth Accounting and Growth Processes (October 1996). IMF Working Paper No. 96/116, Available at SSRN: https://ssrn.com/abstract=883012

Jahangir Aziz (Contact Author)

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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