The Role of Total Factor Productivity Growth in Middle-Income Countries

Kim, Jungsuk; Park, Jung Soo

doi:10.22617/wps179136-2

Cited by 6 publications

(3 citation statements)

References 18 publications

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“…MIT occurred as a developing economy had lost its competitiveness, as it is unable to compete with low-income, lowwage economies in manufacturing exports and unable to compete with advanced economies in high-skilled innovations [2], resulting in the GDP per capita to be maintained to a constant level throughout. Kim and Park argue that a slowdown in economic growth due the increase in occurrence of the above problem is likely to appear when a country's income reached $15000-$16000 [3]. Hu and Zhou further added to this definition that an economy's progression in technological innovation is important maintain competitiveness with developed economies in the export market, avoiding the MIT [4].…”

Section: Overviewmentioning

confidence: 99%

Can the Development of Total Factor Productivity Help Middle-income Countries to Overcome the Middle-Income Trap?

Wang¹

2023

BCPBM

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Falling into the middle-income trap is a common phenomenon experienced by most middle-income countries. The key characteristics of countries fallen into the middle-income trap is that their GDP per capita, instead of rising, is constant throughout the years. A dominant explanation to this problem is that middle-income countries’ total factor productivity is slowing, leading to slow technological development and application. This caused reduced international competitiveness of the developing countries in a sense that neither can they compete against low-income countries or other newly emerged middle-income countries over low level manufacturing as their workers’ wages had risen, nor can they compete against other developed economies over research and development as these middle-income countries lacked the TFP for improvements. Another school of thought asserted that middle-income countries struggling in the middle-income trap is mainly due to the extractive institutions and the misallocation of resources that result in an inefficient growth of TFPs. This study aims to utilize the historic researches and country-specific cases to examine how countries can escape such trap as well as policy implications to boost TFP and reform institutions. The findings of this research suggests that on one hand, middle-income countries should improve their education and research and development. However, TFP growths cannot be fully achieved without improvements in institution. So, on the other hand, they should allocate more resources to the domestic industries to achieve maximum TFP growths and to reduce reliance on multinational enterprises and foreign high-income countries to minimum the effect of extractive institutions.

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Section: Overviewmentioning

confidence: 99%

Can the Development of Total Factor Productivity Help Middle-income Countries to Overcome the Middle-Income Trap?

Wang¹

2023

BCPBM

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“…TFP sendiri mengukur seberapa efisien dan intens pemanfaatan input yang ada (Comin 2006). Berdasarkan jurnal pada Asian Development Bank Working Paper Series yang ditulis oleh Kim and Park (2017), penurunan pertumbuhan TFP akan menyebabkan perlambatan pertumbuhan di negara berpenghasilan menengah. Penelitian lain yang selaras adalah penelitian yang dilakukan oleh Dina (2019) yang menyatakan TFP secara jangka panjang berpengaruh positif terhadap pertumbuhan ekonomi.…”

Section: Gambar 3 Data Tfp Indonesia Sumber: Worldbankunclassified

Pandangan Model Dua-Sektor Lewis dan Model Solow terhadap Pertumbuhan Ekonomi Indonesia

Tri Nugraha,

Muchtar,

Sihombing

2023

ECO

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This study aims to acknowledge the effect of applying the two-sector Lewis and Solow neoclassical growth model in Indonesia’s economic growth. The variables are Urbanization Rate, Labor in Industry Sector, Human Development Index, Total Factor Productivity, and GDP. The research model is an associative quantitative method with multiple linear regression on time series data. The result showed that all variables simultaneously affect GDP significantly. Urbanization (partially) affects GDP positively and significantly. Labor in Industry Sector (partially) doesn’t affect GDP. HDI doesn’t affect GDP. TFP affects GDP positively and considerably at a 90% confidence level. According to this research, the Indonesian Government should increase the quality of their labor, especially in the industry sector. Further research is expected to add more variables that represent both models.

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“…The slowdown in the country's growth may be explained by total factor productivity (TFP) in a more precise manner than labor and capital growth for middle-income groups of nations. There may be a direct linkage from a negative TFP leading to negative growth parameters (Kim and Park, 2017). The countries in Asia–Pacific region have been analyzed for growth parameters using the neoclassical augmented model.…”

Section: Literature Reviewmentioning

confidence: 99%

An empirical investigation of N-11 countries as successors of BRICS using panel data modeling

Gupta

Bhatia²

2021

IJOEM

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PurposeFor more than four decades, persistent economic activities and a focused growth strategy resulted in significant infrastructural and other favorable economic and institutional changes in the world's developing nations. High-quality growth is not just a function of sound economic policies but also implementing a broad range of social policies. The BRICS (Brazil, Russia, India, China and South Africa) nations have proven their testimony on both these factors. Following their path are some other emerging economies like N-11 (or Next Eleven propounded by Goldman Sachs (2005) Report), which this present study tries to examine as successors of BRICS.Design/methodology/approachAlong with panel data regression modelling, the study has applied econometric procedures robust to heterogeneities across various nations and have been able to produce more reliable results that can be generalized for other similar groups of countries. 11 independent variables (both economic and institutional) have been used to meet the study's objective for a period of 34 years (1985–2018).FindingsThe findings of the study reveal that the governments of both the group of countries must work toward their macro-economic stability factors (external debt stocks), technological capabilities (mobile and fixed broadband subscriptions), human capital (health expenditure) and political conditions (mainly the rule of law) to enhance their sustainable economic growth.Research limitations/implicationsThis study enhances knowledge of the determinants of economic growth in emerging countries. Firms from BRICS and N-11 may better understand the factors influencing their internationalization process (both economic and institutional). The study is significant not just for the researchers but also for the policymakers of the BRICS and N-11 to understand in which areas their country is leading or lagging. The study is useful even for the policymakers of other emerging countries of the world who might take lessons from these nations (especially BRICS) and follow their success path. This study helps the governments of other groups of emerging countries such as PIN (Pakistan, Indonesia and Nigeria); MINT (Mexico, Indonesia, Nigeria and Turkey); CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), etc. which can follow the path of BRICS economies in growth and formulate policies to increase their economic growth accordingly. At the enterprise level, it helps MNCs understand BRICS and N-11 markets and formulating entry and growth strategies in these most emerging countries of the world.Originality/valueThe present study is unique. It tries to investigate the projections of the Goldman Sachs report after 15 years of its release. It tries to determine the factors responsible for the economic development in the N-11 countries with advanced econometric techniques. Majorly, the focus is to comparatively analyze the growth trajectory for BRICS and N-11 nations and suggest whether N-11 has the potential to become successors of BRICS. A concentrated effort to examine the most significant drivers (both economic and institutional), which may lead to economic progression, has been made in this study.

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The Role of Total Factor Productivity Growth in Middle-Income Countries

Cited by 6 publications

References 18 publications

Can the Development of Total Factor Productivity Help Middle-income Countries to Overcome the Middle-Income Trap?

Can the Development of Total Factor Productivity Help Middle-income Countries to Overcome the Middle-Income Trap?

Pandangan Model Dua-Sektor Lewis dan Model Solow terhadap Pertumbuhan Ekonomi Indonesia

An empirical investigation of N-11 countries as successors of BRICS using panel data modeling

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