The established economic historiography asserts that Brazil’s per-capita GDP stagnated in the 19th century and that it grew extremely slowly in the period of the monarchy (1822–1889). We argue that these conclusions are based on inadequate methods, insufficient statistical evidence, and disregard for available historical evidence. Building on the methodology followed by one of us in a previous article, with the use of new databases, and a reasoned exploration of alternatives, our best estimate is that over the 1820–1900 period, Brazil’s per-capita income grew at a trend rate of 0.9% per year, a performance like Western Europe and other Latin America countries. Only a sharp economic contraction at the end of the period dulled Brazil’s performance in the 19th century.

This paper explores the relationship between entrepreneurship, measured by the number of new firms per million inhabitants, and modern economic growth in Spain between 1886 and 2000. Following Audretsch and Keilbach’s methodology, our analysis seems to confirm that entrepreneurship has had a positive and statistically significant effect on GDP per capita and labor productivity. This finding challenges the traditional view that the entrepreneurial factor has hindered the country’s economic growth. Additionally, using data on the size and legal form of start-up firms, our results suggest that neither characteristic has been an important driver of Spain’s long-term economic growth. However, we find that the impact of both variables differs depending on the years studied. To our knowledge, this study is the first attempt to test econometrically the long-term contribution of entrepreneurship to Spain’s economic growth.

This paper investigates the permanent effect on total factor productivity (TFP) of temporary shocks. We estimate a structural vector autoregression to test the predictions of endogenous growth models over the business cycle. According to theory, the stock of technological knowledge promotes its flow as researchers “stand on the shoulders of giants.” Therefore, if R&D investment is pro-cyclical—as data show and theory predicts—a recession leads to a temporary deviation of the R&D level from its trend, thus reducing new knowledge creation. The lost technological advancements cause the economy to follow a parallel but permanently lower growth path. Our findings align with the primary theoretical prediction. Quantitatively, the US economy forgoes approximately 1.3% in TFP following an increase in cyclical unemployment that peaks at 1 percentage point above the mean. The historical variance decomposition shows a strong positive effect during the boom of the late 1960s and strong negative effects around the Volcker disinflation period and the Great Recession. Finally, we estimate the effects on R&D of a TFP shock to differentiate between different explanations on how the R&D pro-cyclicality arises. Our results align with models where financial frictions or nominal rigidities drive it.

This paper investigates both conditional and unconditional convergence in labor productivity within the manufacturing industries of the Eurozone over the period 1963 – 2018. We employ two innovative models: constant and varying-coefficient hierarchical panel data convergence regression models, each equipped with two sets of latent factor structures—one comprising global factors and the other industry-specific factors. These models offer distinct advantages, allowing for both global and industry-specific cross-sectional dependencies and permitting parameter heterogeneity across individual industries. Our findings reveal both conditional and unconditional convergence across the manufacturing industry as a whole, as well as among the majority of the 23 sub-manufacturing industries at the ISIC two-digit level. Moreover, we observe significant variation in convergence dynamics among these sub-manufacturing industries. Robustness checks, performed across different subperiods, confirm the reliability of our results. Furthermore, a comparison of our model’s outcomes with those of two alternative models provides additional support for our conclusions.

This paper examines the impact of financially constrained intermediate inputs on within-industry total factor productivity loss. Utilizing exogenous tax reforms in China as a natural experiment, our difference-in-difference analysis reveals that reduced tax burdens lead to increased firm-level intermediate inputs, particularly among financially constrained firms. We incorporate financially constrained intermediate inputs into a partial equilibrium model of firm dynamics. Our calibration suggests that financially constrained intermediate inputs play a quantitatively more important role in accounting for misallocation than financially constrained capital. The presence of financially constrained intermediate inputs introduces a downward bias in the measurement of value-added productivity, especially for firms in the top decile of gross-output productivity. As a result, the average “efficient” levels of capital and labor for the top decile firms in the standard Hsieh and Klenow (2009) exercise are lower than what is truly efficient.

This paper builds on Hsieh and Klenow’s (2009) model to offer a refined analysis of how input misallocations impact aggregate total factor productivity (TFP). We enhance the original model by relaxing the assumption of uniform input prices and adopting an econometric approach to estimate parameters using firm-level data. Estimation of model parameters and allocation efficiency is based on the system of input demand and the production function. We use an indirect inference approach to estimate the system to avoid maximum likelihood estimation, which often faces convergence issues, when there are numerous constraints. We demonstrate our model using the US firm-level manufacturing panel data from 1975 to 2010. Our final sample contains 55,518 observations. We divide the manufacturing industry into seven major categories. Our findings indicate that between 1975 and 2010, the average productivity growth rate was 2.8% but could have reached 3.2% without misallocation, highlighting the substantial gains possible through better resource allocation.

Labour productivity stagnated in the UK in the period between the financial crisis and the emergence of Covid-19. Labour supply and employment grew strongly over the same period, driven primarily by net inward migration. While labour productivity should be independent of labour supply in the long run, this need not be the case in the medium run while capital per worker adjusts. Exploiting a range of evidence, we conclude that around 4 pp of the estimated 20% shortfall in productivity from its previous trend that had emerged by 2019 might be explained by increased labour supply, with a slowdown in TFP growth accounting for most of the shortfall.

The study analyzes productive efficiency of crop farming in the EU. We use publicly available data on crop farming from FADN database. Standard efficiency measurement techniques based on frontier analysis indicate that the representative farms provided in the database are fully efficient, even though there is ample evidence in the literature that this is highly unlikely. We find that this is a consequence of overly restrictive assumptions about the compound error in standard SF models. The efficiency benchmark, based on the best model given data with generalized error specification, reveals substantial differences in crop farming efficiency in the EU.

We explore the theoretical conditions in which natural capital improves explanations of aggregate income growth from factor changes. With positive total factor productivity (TFP) growth, including natural capital better explains growth if natural capital growth rates exceed physical capital growth rates. With negative TFP growth and higher natural capital growth rates, natural capital worsens explanations of growth. Using a comprehensive dataset on natural resource stocks and income shares in GDP, we perform an empirical analysis with 99 countries over three time periods between 2001 and 2015 and find that 41 per cent of country-time periods meet the conditions for improved growth explanation with natural capital. Of these, 59 per cent occur because TFP growth is negative, and physical capital growth exceeds that of natural capital. In these cases, including natural capital simultaneously reduces bias in factor shares and TFP estimates and improves the share of growth explained by changes in factors.

Relying upon an original (country-sector-year) measure of robotic capital ($RK$), we investigate the degree of complementarity/substitutability between robots and workers at different skill levels. We employ nonparametric methods to estimate elasticity of substitution patterns between $RK$ and skilled/unskilled labor over the period 1995–2009. We show that: i) on average, $RK$ exhibits less substitutability with skilled workers compared to unskilled workers, indicating a phenomenon of “RK-Skill complementarity”. This pattern holds in a global context characterized by significant heterogeneity; ii) the dynamic of “RK-Skill complementarity” has increased since the early 2000s; iii) the observed strengthening is more prominent in OECD countries, as opposed to non-OECD countries, and in the Manufacturing sector, compared to non-Manufacturing industries.

This paper investigates the nexus between per capita income convergence and political institutions within the Eurozone. Employing data spanning the years 2002–2019, the research initially identifies multiple convergence clusters and subsequently examines the relationship between the creation of these clusters and different aspects of political institutions. The findings reveal that there are multiple steady states in the Eurozone, and their formation is notably influenced by political institutions alongside other conventional economic determinants derived from the Solow model. Furthermore, the study underscores that improvements in regulatory quality, as well as in aspects such as democracy, government effectiveness, and corruption control, positively impact income convergence across all member countries. These findings carry significant policy implications.

Even at long time horizons, modern outcomes are in some sense bounded by history. Culture shapes how people interact and as it propagates across generations, groups with more common ancestors face less frictions to cooperation. This, in turn, affects institutional and technological diffusion, implying a society's history plays a crucial role in the causes of sustained long-run economic growth. To test this, we follow other studies by proxying for historical effects with genetic relatedness, which yields a temporal proportionality of shared common ancestry. Measuring cultural traits are more challenging. We develop a new systematic measure through network analysis of Wikipedia. Connectivity statistics over the encyclopaedia's hyperlink-directed network captures unique features of cultural relatedness. Further, as we index pages, we can coarsen the network into specific topics. The results show how history correlates broadly over a range of cultural factors. Differences across the coarsened networks demonstrate not simply that history matters, but where it matters less.

This paper assesses Brazil's real convergence (1822–2019) through unit root tests and Markov Regime-Switching (MS) models in three different scenarios: towards (i) other six Latin American countries (LA6); (ii) Portugal; and (iii) the technological frontier country, the US. The extended unit root test results favour Brazil's very long-run real convergence towards LA6 and Portugal, but not the US. The estimated MS models, involving two different regimes, real convergence and real non-convergence/divergence, capture institutional quality's positive effect in promoting Brazil's real convergence.

In recent decades, the labour share has experienced a downward trend in Portugal at the same time as a weaker and anaemic growth pattern. This seems to suggest that the fall in the labour share represents an important constraint on Portuguese economic growth, which is contrary to the orthodox claims around wage restraint policies – namely, that such policies are a necessary condition of improved macroeconomic performance, owing to their positive effects on private investment through higher profits and on net exports through reduced unit labour costs and a corresponding rise in competitiveness. This study assesses the relationship between labour share growth and economic growth by performing a time series econometric analysis focused on Portugal from 1971 to 2021. Findings show that labour share growth has positively impacted on economic growth in Portugal, which is in line with heterodox claims and particularly with post-Keynesian economics on the beneficial effects on private consumption played by the growth of wages. Findings also confirm that the Portuguese economy has followed a wage-led growth regime instead of a profit-led growth regime; that is, a rise in wages increases aggregate demand and, therefore, boosts economic growth because its beneficial effect on private consumption more than compensates for a prejudicial effect on private investment and on net exports. The study points out the urgent need to adopt public policies to support the growth of wages to avoid more decades of dismal growth and a new ‘secular stagnation’ in Portugal.

This paper examines the effect of frontier academic research on technological development and the way institutional quality influences this impact. Using a dataset that covers 18 OECD countries over the 2003–2017 period, we find that frontier academic research exerts an important influence on total factor productivity. First, frontier academic research induces technological change by directly enhancing production processes and management methods. Second, frontier academic research stimulates industrial innovations, which in turn improves productivity. Regarding the moderating effect of institutional variables on these relationships, we find that positive moderation only exists for some, not all, of the institutional variables. In that case, a higher level of these variables is found to strengthen the way countries reap benefits from frontier academic research and industrial innovation. However, the moderation of institutions is much less clear with the process that turns frontier academic research into industrial innovations.

This article examines the key features of the UK’s spatial productivity relationships and discusses some of the key questions currently being articulated or debated as they relate to potential devolution-related discussions. The paper demonstrates that the local productivity challenges facing UK regions are nationwide in nature rather than local, and systemic rather than specific. In particular, the scale-productivity relationships across cities and regions which are evident in almost all other OECD countries are largely absent in the UK. Instead, previous prosperity is the dominant marker of current local prosperity, suggesting that cumulative causation processes define the UK regional and urban economic landscape rather than scale relations. This article explains these features in a manner which is accessible to a wide audience, in order to provide greater clarity regarding the fundamental economic problems to be addressed and also the underlying objectives which the Levelling Up agenda needs to achieve.

Over the past 15 years, productivity growth in advanced economies has significantly slowed, giving rise to the productivity paradox of the New Digital Economy – that is, the notion of increased business spending on information and communication technology assets and digital services without a noticeable increase in productivity. We argue that time lags are the most important reason for the slow emergence of the productivity effects from digital transformation. This paper provides evidence that underneath the slowing productivity growth rates at the macro level, signs of structural improvements can be detected. In the United States most of the positive contribution to productivity growth is coming from the digital producing sector. The Euro Area and the United Kingdom show larger productivity contributions from the most intensive digital-using sectors, although the United Kingdom also had a fairly large number of less intensive digital-using industries which showed productivity declines. We also find that increases in innovation competencies of the workforce are concentrated in industries showing faster growth in labor productivity, even though more research is needed to identify causality. Finally, we speculate that as the recovery from the COVID-19 recession gets underway the potential for significant productivity gains from digital transformation in the medium term is larger than during the past 15 years.

This paper studies the evolution of the Chilean economy in the late 19th and early 20th century, a period when the country's convergence with developed countries came to an end. We analyse this problem in the context of the modern literature on the middle-income trap. The social, political and economic history of Chile between 1875 and 1939 is examined and the presence of most of the factors associated with the middle-income trap is found. We complement this narrative through a quantitative analysis based on the synthetic control method and argue that the process of state-led industrialisation undertaken in the country leading to the formation of CORFO was a key economic and political event. Our work presents some general lessons for developing countries facing a similar context.

This article has used the method of instrumental variables to evaluate the impact of health services on the productivity of rural households’ farming labor in Burkina Faso. The distance from the household's homestead to the Health and Social Promotion Center (HSPC) was considered as an instrumental variable. The results revealed that resorting to a HSPC in case of an unexpected illness in the rainy season significantly improves the farm labor productivity by FCFA 3170.5880 per person-day. For improving agricultural productivity, we suggest that public decision-makers should focus on the availability and the quality of HSPC services in rural areas.

This paper reports on the availability of regional capital stock data,1 in the form of new/updated regional (NUTS2 level) capital stock estimates,2 building on an approach (Perpetual Inventory Method) which had been previously developed for the European Commission. The particular focus here is on the UK and how these data are used to shed light on regional labour productivity disparities. Using a NUTS2 level dataset constructed for the period 2000–16, we use a dynamic spatial panel approach from Baltagi et al. (2019) to estimate a model relating productivity to output (growth or levels) and augmented by explicit incorporation of capital stock plus various other covariates such as human capital. We find that regional variations in capital stocks per worker make a significant contribution to regional variations in labour productivity, but the geography of human capital is also highly relevant. Moreover, we give evidence to show that as human capital rises, notably as we move from the regions to London, the impact of capital stock per worker is less. The effect of capital stock depends on the level of human capital.