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Abstract
New panel data estimates for the four East Asian Tigers show that the contribution of Total Factor Productivity (TFP) to growth is much higher than past estimates. An extended production function with learning by doing implies that TFP is about 3.5% and these countries will grow at this rate in the long-run.
Notes
1 To conserve space we shall be brief. See Rao (Citation2007) for details.
2 The Random Effects Model (REM) is used in such dynamic panel models. However, we have conducted the Hausman test where the null is REM against the alternative of the fixed effects model. The null could not be rejected at the 5% level. The computed test statistic, with p-value in the square brackets is .
3 It may be thought that there is no need for the levels equation and the systems estimation. However, when only the equation in first differences is estimated, a standard practice in many panel data estimates of growth equations, none of the parameters were significant. This may be due to some limitations noted in the text.