Narrow Results

This paper consists of two parts. In the first part we carry out a traditional growth accounting exercise for the private business sectors of the Swedish economy. A search for structural breaks during the sample period, using Chow tests with a dynamic specification of Total Factor Productivity (TFP) growth rates, and Granger causality tests are carried out for the nine sectors of the Swedish economy. We combine the growth rates of value added and hours worked and calculate labor productivity for the period 1960–1999. In order to facilitate comparisons we present Swedish and international results. To a large extent we are able to replicate the Swedish results. The slow down in TFP growth rates in the 1970s can be identified with the first and the second oil shocks in 1973 and 1979. The other structural breaks occurred in the early 1990s and could possibly be identified with the tax reform of the century in 1991 and the severest of recessions that took place in the Swedish economy. The Granger causality tests indicate that growth rates in investment Granger causes growth rates in TFP for the agriculture and the financial institutions, real estate and other business, while TFP growth rates in mining and quarrying, and manufacturing granger causes growth rates in investment.

In the second part of the paper, we Hodrick–Prescott filter the data, and calculate cross correlations of detrended output, hours, investment and TFP at different leads and lags. The results indicate that investment leads TFP for agriculture, hunting, forestry and fishing, electricity gas and water, and for education, health and social work and community social and personal services. Investment lags TFP for the mining and quarrying, manufacturing industry, and for financial institutions and insurance companies, real estate renting and business service companies. Hours worked lead the TFP cycle for mining and quarring, manufacturing and wholesale/retail trade. The decomposition of TFP into trend and cyclical component dates the business cycle. Standard deviations on the cyclical components of value added, hours worked, TFP, and gross investment reveals that the most volatile variables are gross investment, followed by TFP, GDP and hours worked.

The contribution of this part of the paper lies in the disaggregated data set containing annual information for the period 1963–1999, and in the application of several analytical tools to the growth accounting exercise results. In addition such an extensive growth accounting exercise has not been carried out for the private business sectors of the Swedish economy.

This paper develops a human capital measure in the sense of Schultz [Schultz, T. W. 1960. "Capital Formation by Education." Journal of Political Economy, 68: 571, University of Chicago Press.] and uses this to reevaluate the contribution of human capital to China's economic growth rather than relying on years of schooling as in current literature. The results indicate that human capital plays an important role in China's economic growth, 38.1% of economic growth over 1978–2008, and even higher for 1999–2008. In addition, because human capital formation accelerated following major educational expansion increases after 1999 (college enrollment in China increased nearly fivefold between 1997 and 2007) while growth rates of Gross domestic product (GDP) are little changed over the period after 1999, total factor productivity (TFP) increases fall if human capital is used in growth accounting as we suggest. TFP, by our calculations, contributes 16.92% of growth between 1978 and 2008, but this contribution falls sharply between 1999 and 2008. TFP growth estimates along with the high contribution of physical and human capital to economic growth seem to suggest that there could have been decreases in the efficiency of input usage in China or worsened misallocation of physical and human capital in recent years. These results underscore the importance of efficient use of human capital, as well as the volume of human capital creation, in China's growth strategy.

Global manufacturing and international supply chains have changed the way trade and economic growth are understood today. Recent statistical advances suggest new ways of looking at growth accounting when global value chains (GVCs) — articulating supply and demand chains from an international perspective — are taken into consideration. The method is applied to the G-20 countries, a group of leading developed and developing economies that took a prominent role in fostering and managing global economic governance. The demand dynamics is first analyzed through a growth-accounting decomposition, then through the long term determinants of income elasticity of imports and the household marginal propensity to consume imported products.

This paper fruitfully combines two complementary theories: performance measurement and input-output analysis. Our point of departure is the theory of the consumer, who maximizes utility subject to a budget constraint. His well-being can be measured by the change in the consumption bundle, valued at constant prices. Input output analysis is invoked to impute the change in this bundle to technical change, a terms-of-trade effect and two types of efficiency change. The analysis is extended to environmental economics.