Technological sources of economic growth in Europe and the U.S.

Abstract

This paper assesses the role of different sources of technological change as determinants of economic growth in a group of selected OECD countries during the period 1980–2010. We consider three different sources of growth: neutral technical change associated with Total Factor Productivity, investment-specific technical change (ISTC) embodied in capital assets, and improvements in the quality of labor services generated by human capital accumulation. The contribution to growth of each of these sources is computed using two different approaches: the standard (statistical) growth accounting and the structural growth decomposition obtained from a general equilibrium growth model. We found that the effect of ISTC dominates that of neutral technology and human capital in all of the countries considered. On average, more than 50% of productivity growth is explained by ISTC. Contributions to growth from ICT and non-ICT technical change are in general of similar magnitude.

Keywords

• output and productivity growth
• growth accounting
• investment-specific technological change
• neutral technological change
• human capital