Innovation, total factor productivity and economic growth in Pakistan: a policy perspective

Journal of Economic Structures

The Official Journal of the Pan-Pacific Association of Input-Output Studies (PAPAIOS)

Table 2 Results of growth accounting (alternative approach)

Years	%TFPG (average)	% ∆ in TFP (average)	Labor productivity growth (per worker in average)
1972–1976	1.041	0.775	3.872
1977–1981	1.057	0.476	3.889
1982–1986	1.103	0.812	3.962
1987–1991	1.159	0.943	4.064
1992–1996	1.213	0.852	4.109
1997–2001	1.236	0.475	4.136
2002–2006	1.273	0.611	4.161
2007–2011	1.283	− 0.057	4.192
2012–2016	1.314	0.649	4.186

However, the productivity (along the lines of the Solow–Swan (neoclassical) model; see, Barro and Sala-i-Martin 2004): where growth rate of output as ∆Y/Y = a ∆K/K + (1 − a)∆L/L + ∆A/A, and TFP can be measured as ∆A/A (TFP) = ∆Y/Y − (a∆K/K + (1 − a)∆L/L). Where labor productivity growth (average per worker) = ∆(Y/L)/(Y/L) = ∆A/A (Since the growth rate of capital per unit of labor is zero in the steady state (see Solow 1956), the growth accounting formula can be written simply in terms of the labor productivity growth rate)