Innovation Based Growth Accounting: Understanding the Economics of Decoupling in Colombia

Juan Ricardo Perilla Jiménez

Review of Development Economics, 2026, vol. 30, issue 2, 1215-1233

Abstract: The role of productivity measurement in evaluating the decoupling hypothesis—which posits a divergence between productivity growth and labour's share of income—is investigated using a detailed dataset of quality‐ and price‐adjusted production factors across Colombian economic sectors over the period 1990–2019. The adjustment is found to increase the estimated contribution of production factors, while attenuating the contribution attributed to productivity in explaining value‐added growth. Cointegration tests reveal no long‐run relationship between productivity indicators and the labour share at the aggregate level, although sector‐specific evidence of cointegration persists. Short‐run dynamics, assessed through panel data econometrics, also support the decoupling hypothesis, further reinforcing the empirical relevance of the adjustment in improving model specification. A key recommendation for researchers exploring income production and distribution—as well as related concerns of efficiency and wage equity—is to leverage recent advances in growth accounting methods and to closely examine disaggregated input structures and relative price dynamics that underpin aggregate outcomes.

Date: 2026
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