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The Technical Efficiency of National Economies: Do the Institutions, Infrastructure and Resources Rents Matter?

Author

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  • Mamonov, M.

    (Center for Macroeconomic Analysis and Short-term Forecasting (CMASF) at the Institute for Economic Forecasting of the Russian Academy of Science, Moscow, Russia)

  • Pestova, A.

    (Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) at the Institute for Economic Forecasting of the Russian Academy of Science, Moscow, Russia
    National Research University "Higher School of Economics", Moscow, Russia)

Abstract

In this paper, we propose an idea of introducing the basic statement of the economic development theory on the role of institutions in economic growth and the infrastructure proxies into the augmented five-factor production function. As the fourth and fifth factors, we employ the aggregated index of institutional development designed by the Fraser Institute and the WDI indicators of infrastructural conditions, respectively, alongside with the standard set of labor, physical and human capital. We show that the correct estimation of total factor productivity requires, first, extracting resources rents from the output proxy. This allows eliminating of the exporters of natural resources from the top-10 technological leaders. Second, adjustment of output by Hodrick-Prescott filter is carried out. This has excluded the transfer of the output cyclical component to the technical efficiency indicators. Our analysis has shown that the technological progress is more rapid in developing countries as compared to developed economies. We perform our estimates under Stochastic Frontier Analysis (SFA) obtaining data from the World Bank, IMF, Fraser Institute and UNESCO on 140 countries over the 1980-2010.

Suggested Citation

  • Mamonov, M. & Pestova, A., 2015. "The Technical Efficiency of National Economies: Do the Institutions, Infrastructure and Resources Rents Matter?," Journal of the New Economic Association, New Economic Association, vol. 27(3), pages 44-78.
    • Handle: RePEc:nea:journl:y:2015:i:27:p:44-78
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    References listed on IDEAS

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    Cited by:

    1. Alexander Yu. Apokin & Irina Ipatova, 2016. "How R&D Expenditures Influence Total Factor Productivity and Technical Efficiency?," HSE Working papers WP BRP 128/EC/2016, National Research University Higher School of Economics.

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    More about this item

    Keywords

    production functions; institutions; infrastructure; resources rents; technological efficiency; SFA; Malmquist index;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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