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Measuring total factor productivity for ethiopia: regression-based growth accounting the case of the post 1991 period

Author: 
Mulugeta Tesfay and Abrha Gebreslassie
Subject Area: 
Social Sciences and Humanities
Abstract: 

This paper examines the determination of the role TFPG to aggregate output growth in Ethiopia for the post 1991 period and checks if growth can be sustained with enhanced factor efficiency or not . It used the regression based growth accounting technique to decompose output growth. The research finding shows that the post-1991 notable growth in Ethiopia has been a result of factor accumulation. Physical capital explained more than half of the growth in output. However, the role TFPG has been significant that it accounted for above 34 percent of the GDP growth. On the basis of these empirical findings, it may be proposed that an economic policy focused on the promotion of public and private investment on physical capital could further enhance economic growth. Along with this, investments to augment the quality and employment of labor are also vital sources of growth. Furthermore, more openness, political stability and higher investment to GDP ratio are related to better factor productivity. Finally, policy makers should intensify their efforts to encourage investment in the industrial sector as the share of capital investment to GDP growth is strong.

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