Determinants of productivity across countries:an exploratory analysis

Following Solow's (2001) recent advice, this paper takes productivity as the left-hand-side variable and offers a cross-country analysis of its determinants. The analysis follows the two-stage methodology, the first of which is devoted to obtaining productivity estimates, and the second stage is devoted to analyzing these estimates. The paper classifies productivity determinants into four types, namely 'economic factors,' 'institutions,' 'social base,' and 'physical base.' The empirical productivity model developed in this paper allows space for productivity determinants of all these different types and hence may prove more helpful from policy point of view than do mono-causal models of productivity. The empirical relationships explored and established in this paper should also prove helpful in further development of a theory of total factor productivity (TFP).