It's not factor accumulation: Stylized facts and growth models

William Easterly, Ross Levine

    Research output: Contribution to journalArticle

    Abstract

    The article documents five stylized facts of economic growth. (1) The "residual" (total factor productivity, TFP) rather than factor accumulation accounts for most of the income and growth differences across countries. (2) Income diverges over the long run. (3) Factor accumulation is persistent while growth is not, and the growth path of countries exhibits remarkable variation. (4) Economic activity is highly concentrated, with all factors of production flowing to the richest areas. (5) National policies are closely associated with long-run economic growth rates. These facts do not support models with diminishing returns, constant returns to scale, some fixed factor of production, or an emphasis on factor accumulation. However, empirical work does not yet decisively distinguish among the different theoretical conceptions of TFP growth. Economists should devote more effort toward modeling and quantifying TFP.

    Original languageEnglish (US)
    Pages (from-to)177-219
    Number of pages43
    JournalWorld Bank Economic Review
    Volume15
    Issue number2
    StatePublished - 2001

    Fingerprint

    total factor productivity
    productivity
    economic growth
    income
    returns to scale
    economic activity
    economist
    Growth model
    Stylized facts
    Factors
    modeling
    economics
    Factors of production
    Total factor productivity
    Income
    Economic growth
    Country differences
    Returns to scale
    Modeling
    Economic activity

    ASJC Scopus subject areas

    • Finance
    • Accounting
    • Economics and Econometrics
    • Development

    Cite this

    It's not factor accumulation : Stylized facts and growth models. / Easterly, William; Levine, Ross.

    In: World Bank Economic Review, Vol. 15, No. 2, 2001, p. 177-219.

    Research output: Contribution to journalArticle

    Easterly, W & Levine, R 2001, 'It's not factor accumulation: Stylized facts and growth models', World Bank Economic Review, vol. 15, no. 2, pp. 177-219.
    Easterly, William ; Levine, Ross. / It's not factor accumulation : Stylized facts and growth models. In: World Bank Economic Review. 2001 ; Vol. 15, No. 2. pp. 177-219.
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