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. Its shown that at least until 1975 factors of production ( capital and education) were the main cause of output dispersion and that productivity variance was considerably smaller than in late years. Only after this date the prominence of TFP started to show up in the data, as the majority of the literature have found. The growth decomposition exercises showed that the reversal of relative importance of TFP vis-a-vis factors is explained by the very good (bad) performance of detrended TFP of fast (slow) growing economies. Although growth in the period, on average, is mostly due to factors accumulation, its variance is explained by productivity