You Have Been Asked to Calculate TFP Growth for Four

question 90

Essay

You have been asked to calculate TFP growth for four countries from 1985-2014: China, Hungary, South Korea, and Mexico. You decide to reach for the Solow growth model to do your calculations, specifically, the Cobb-Douglas production function:
. Using the data available in the table below, which shows the average labor share and growth rates of real GDP per capita, labor composition, and capital per capita from 1985-2014, find the TFP growth rate for each country. Given what you know about each country, what may explain your results?Table 6.3
(Source: Penn World Tables 9.0)

---

Definitions:

Input Market

The input market is the marketplace where companies or individuals procure resources, such as raw materials, labor, and services, needed to produce goods or offer services.

Demand Curve

A graph showing how the demand for a commodity or service varies with changes in its price.

Individual Producer

Describes a single entity or person that creates goods or services, typically operating within a larger market framework.

Oligopoly

A market structure in which a few large firms dominate the industry, influencing the price and production of goods.