Determinants of Total Factor Productivity in the Middle East and North Africa

Anna Raggl

Review of Middle East Economics and Finance, 2015, vol. 11, issue 2, 119-143

Abstract: A decomposition of output growth rates of Middle Eastern and North African countries shows that the contributions of human capital-augmented labor and physical capital to output growth are comparably small and stable over time and that in most countries a considerable share of output growth is attributed to growth in total factor productivity. This paper empirically assesses the determinants of total factor productivity in the Middle East and North Africa region between 1980 and 2009. The findings suggest that human capital is not only an input factor of production but also a quantity that changes the efficiency by which existing input factors are used. Domestic innovations appear to be efficient only if a certain level of educational attainment is reached by a country. In addition, human capital contributes to the ability of efficient adoption of technology from abroad and allows a faster catch-up with technological leaders. Globalization, in combination with a (comparably low) threshold endowment of human capital, is estimated to increase total factor productivity in Middle Eastern and North African countries.

Keywords: total factor productivity; technological progress; human capital; technology adoption; Middle East and North Africa (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/rmeef-2014-0017

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