Productivity and Growth

How much of the growth of output can be accounted for by the growth of inputs and how much is due to the growth of productivity? This book is the most detailed attempt yet made to answer this question for Britain. Estimates of outputs and inputs for over 130 industries were constructed, following the methodology pioneered by Professor Dale Jorgenson. These estimates can be employed to build up a picture of the performance of UK manufacturing as a whole. Contrary to the impression left by some previous authors, growth of productivity is found to play a relatively minor role – growth of inputs, when properly measured, accounts for most of the growth of output. The wealth of data which this book presents can also be used to shed light on a number of recent controversial views attached to the ‘New Growth Theory’. According to this theory, externalities and increasing returns, often held to be associated with fixed investment, are the engine of economic growth. However, this book finds that the evidence does not support these claims.