ACCOUNTING FOR DISCREPANCIES AMONG ESTIMATES OF TFP GROWTH IN EAST ASIA

Five studies of total factor productivity (TFP) growth in eight East Asian countries are surveyed. The discrepancies among the studies are very large: the average absolute discrepancy across studies of estimated TFP growth in each country exceeds the average absolute difference across countries of the rates estimated by each study. A method for decomposing these large discrepancies among the studies is proposed and applied. The single largest source of discrepancies is the estimated elasticity of GDP with respect to capital. It is argued that the two studies that used regression estimates of this elasticity are probably less reliable than the three that derived it by assuming that factors are paid the value of their marginal product. On this basis, our preferred estimates imply that annual TFP growth in East Asia ranged from 3 per cent in Japan to a small decline in the Philippines.