Appendix A - Basic Growth-Accounting Methodology

Appendix A - Basic Growth-Accounting Methodology

The empirical relationship used to estimate growth of multifactor productivity by the basic growth-accounting methodology is shown below:

uppercase delta of uppercase T over uppercase T = uppercase delta of uppercase Q over uppercase Q minus [(lowercase alpha of delta of Labor over Labor) plus (lowercase beta of delta of Capital over Capital) plus (lowercase gamma of uppercase delta of Intermediate Inputs over Intermediate Inputs)]

Where:

uppercase delta of uppercase T over uppercase T = Growth of MFP

uppercase delta of uppercase Q over uppercase Q = Growth of gross output

  uppercase delta of Labor over Labor = Growth of labor

  upeprcase delta of Capital over Capital = Growth of capital

  uppercase delta of Intermediate Inputs over Intermediate Inputs = Growth of intermediate inputs

α = Share of labor cost in output

β = Share of capital cost in output

γ = Share of intermediate inputs cost in output.