Chinese Academy of Sciences

In this paper, we apply a growth accounting method in an open economy based on nonparametric local polynomial regression estimation technique to analyze the sources of economic growth in twelve developing economies over the period 1960-2002. The method dispenses with stringent assumptions, such as specific form of aggregate production function and competitive factor markets, and it also considers the welfare effect of terms-of-trade change similar to technological change. The results indicate that terms of trade shifts have distinct positive effects in four economies and small negative effects in the others. Capital accumulation and employment growth account for a large part of real output growth. The growth of total factor productivity plays a slight role in economic growth