Total Factor Productivity Growth and the Role of Externalities”. National Institute Economic Review

This paper argues that the greater part of economic growth can be accounted for by the accumulation of human and physical capital. The role of externalities is relatively small. This view is defended by reviewing the most sophisticated growth accounting studies and also by presenting some new evidence on the growth of total factor productivity in 53 countries over the period 1965 to 1990. 1. Introduction(’) This paper argues that the greater part of economic growth can be accounted for by the accumulation of human and physical capital. Moreover this accumulation is by and large rewarded by the market. It follows that the role o