Fernando A. Veloso

The Evolution of International Output Differences (1960-2000): From Factors to Productivity

This article presents a group of exercises of level and growth decomposition of output per worker using cross-country data from 1960 to 2000. It is shown that at least until 1975 factors of production (capital and education) were the main source of output dispersion across economies and that productivity variance was considerably smaller than in later years. Only after this date did the prominence of productivity start to show up in the data, as the majority of the literature has found. The growth decomposition exercises showed that the reversal of relative importance of productivity vis-a-vis factors is explained by the very good (bad) performance of productivity of fast- (slow-) growing economies. Although growth in the period, is on average, is mostly due to factor accumulation, its variance is explained by productivity.

On the Evolution of Total Factor Productivity in Latin America

Because of several policy distortions, including import‐substitution industrialization, widespread government intervention, and both domestic and international competitive barriers, there has been a general presumption that Latin America has been much less productive than the leading economies in the last decades. In this paper we show, however, that until the late 1970s Latin American countries had high productivity levels relative to the United States. It is only after the late 1970s that we observe a fast decrease of relative total factor productivity (TFP) in Latin America. We also show that the inclusion of human capital in the production function makes a crucial difference in the TFP calculations for Latin America.

Evolução da Produtividade Total dos Fatores na Economia Brasileira com Ênfase no Capital Humano – 1992-2007

This paper investigates the evolution of total factor productivity (TFP) for the Brazilian economy between 1992 and 2007, using a measure of human capital based on microeconomic data. One of the main contributions of this paper is to construct a specific measure of human capital that allows one to quantify both the evolution of the participation of the different levels of education and experience of the labor force in total hours worked and the variation of its productivity over time. The results show that TFP increased only 11.3% between 1992 and 2007 and accounted for about 22.9% of the growth rate of GDP in the period. Another important result is that the human capital of the labor force in Brazil was almost stationary during the period. This was due to the fact that the increase in the participation component of the labor force was compensated by the reduction in the productivity component. Finally, it is shown that the increase in the supply of more educated workers explains the decline in human capital compensation. In particular, the lack of a better educated labor force does not appear to have imposed a restriction to economic growth, since its supply increased faster than the demand.

On the Tyranny of Numbers: East Asian Miracles in World Perspective

In a widely cited paper, Young (1995) showed that the East Asian miracles (Hong Kong, Korea, Singapore and Taiwan) grew mostly through input accumulation during the period 1966-1990. Using data for 83 countries taken from the Penn World Table, version 6.1, and Barro and Lee (2000), we use a common methodology in order to compare the growth performance of the East Asian miracles with the rest of the world. We find that, even though the TFP growth rates of the four East Asian miracles were not remarkable in absolute values, they were very high in relative terms. We argue that, since Young (1995) focused only on the four East Asian miracles, he did not notice that 1966-1990 was a period of particularly low TFP growth and particularly high factor accumulation in the world. Despite the fact that they had high rates of physical capital accumulation, the distinguishing feature of these miracles was their relative productivity growth performance.