CASE STUDY 7-2
Growth in Output per Worker from Capital Deepening, Technological Change, and Improvements in Efficiency
Table 7.2 gives the growth of output per worker from 1965 to 1990 and the contribution to that growth made by capital deepening (i.e., the increase in capital per worker) and improvements in technology and efficiency (catching-up), for a selected group of developed and developing countries, arranged according to the size of their economy. The table shows that the growth of output per worker grew most rapidly in Korea (425 percent), followed by Japan (209 percent), and Thailand (195 percent) The United States experienced the lowest growth (31 percent) among the nations included in Table 7.2. The table also shows that most of the growth in output per worker came from capital deepening. Technology made the largest contribution to growth in France, followed by India, Japan, Germany, and Thailand. The largest contribution from improvements in efficiency occurred in Korea, Italy, and Thailand. Argentina, Chile, Mexico, Spain, and the United Kingdom actually suffered a reduction in efficiency.