A Critique of the So-Called Total Factor Productivity
Evidence from the Automotive Manufacturing Industry in Argentina
DOI:
https://doi.org/10.46661/rec.12042Keywords:
Productivity, Total factor productivity, Automotive industry, Growth accounting, Technological changeAbstract
This paper questions a series of conceptual and empirical aspects related to so-called total factor productivity (TFP). First, despite occupying a central role in the neoclassical explanation of economic growth, TFP lacks conceptual and operational rigor, as it is defined as an arithmetic residual. Second, the residual that constitutes TFP arises from the omission of the accounting identity between, on the one hand, value added, and on the other, profits and wages. Alternatively, it may also be considered that the residual stems from disregarding capital utilization rates and labor intensity. Third, total factor productivity varies significantly depending on which output indicator is used. The paper illustrates these issues by examining the motor vehicle manufacturing sector in Argentina.
Downloads
References
Abramovitz, Moses (1956). Resource and Output Trends in the United States Since 1870, NBER. http://www.nber.org/chapters/c5650
Abramovitz, Moses (1993). The search for the sources of growth: areas of ignorance, old and new, Journal of Economic History 53/2, 217-243. https://www.jstor.org/stable/2122991 https://doi.org/10.1017/S0022050700012882 DOI: https://doi.org/10.1017/S0022050700012882
Andrade Araujo, Jair; Gaspar Feitosa, Debora y Bittencourt da Silva, Altimir (2014). América Latina: productividad total de los factores y su descomposición, Revista de la CEPAL 114, pp. 53-69. https://www.cepal.org/es/publicaciones/37436-america-latina-productividad-total-factores-su-descomposicion. https://doi.org/10.18356/0e0eafe2-es DOI: https://doi.org/10.18356/0e0eafe2-es
Astarita, Rolando (2010). La productividad total de los factores, sinsentido y mistificación. https://rolandoastarita.blog/2010/11/28/la-ptf-sinsentido-y-mistificacion/
Baier, Scott; Gerald Dwyer, Jr y Robert Tamura (2002). How important are capital and total factor productivity for economic growth?, Working Paper No. 2002-2a, Federal Reserve Bank of Atlanta, Atlanta. https://onlinelibrary.wiley.com/doi/abs/10.1093/ei/cbj003 https://doi.org/10.2139/ssrn.301213 DOI: https://doi.org/10.2139/ssrn.301213
Baptist, Simon y Cameron Hepburn (2012). Intermediate inputs and economic productivity, GRI Working Papers 95, Grantham Research Institute on Climate Change and the Environment. https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2014/02/WP95-inputs-and-economic-productivity.pdf
Baumann Fonay, Iván y Luciano Cohan (2018). Crecimiento económico, PTF y PBI potencial en Argentina, Subsecretaría de Programación Macroeconómica, Ministerio de Hacienda de la República Argentina.
Beaulieu Joseph y Joe Mattey (1998). The Workweek of Capital and Capital Utilization in Manufacturing, Journal of Productivity Analysis 10/2, 199-223. https://doi.org/10.1023/A:1018629508255 DOI: https://doi.org/10.1023/A:1018629508255
Bekerman, Marta y Martín Grandes (1997). Apertura y crecimiento económico en las economías periféricas, DT N°6, Centro de Estudios de la Estructura Económica.
Boulding, Kenneth (1961). "Some Difficulties in the Concept of Economic Input", en Output, Input, and Productivity Measurement, Princeton University Press, 331 - 346.
Corrado, Carol, Charles Hulten y Daniel Sichel (2009). Intangible capital and U.S. economic growth, Review of Income and Wealth 55/3, 661-685. https://www.conference-board.org/pdf_free/IntangibleCapital_USEconomy.pdf https://doi.org/10.1111/j.1475-4991.2009.00343.x DOI: https://doi.org/10.1111/j.1475-4991.2009.00343.x
Easterly, William y Rose Levine (2001). It's not factor accumulation: stylized facts and growth models, The World Bank Economic Review 15/2, 177-219. https://documents1.worldbank.org/curated/en/430741468330877586/pdf/773550JRN0200100Factor0Accumulation.pdf https://doi.org/10.1093/wber/15.2.177 DOI: https://doi.org/10.1093/wber/15.2.177
Felipe, Jesús y John McCombie (2019). The illusions of calculating total factor productivity and testing growth models. From Cobb-Douglas to Solow and Romer, ADB Economic Working Papers N° 596, Asian Development Bank. https://www.adb.org/sites/default/files/publication/534761/ewp-596-tfp-testing-growth-models.pdf https://doi.org/10.22617/WPS190486-2 DOI: https://doi.org/10.22617/WPS190486-2
Griliches, Zvi (1996). The discovery of the residual: a historical note, Journal of Economic Literature 34/3, 1324-1330. https://www.nber.org/papers/w5348
Grotz, Mauricio (2020). Productividad total de los factores: revisión conceptual y tendencias en la literatura, Asociación Argentina de Economía Política: Working Papers 4353, Asociación Argentina de Economía Política.
Hartley, James (2000). Does the Solow residual actually measure changes in technology?, Review of Political Economy 12/1, 27-44. https://doi.org/10.1080/095382500106803 DOI: https://doi.org/10.1080/095382500106803
Hulten, Charles (1978). Growth accounting with intermediate inputs, Review of Economic Studies 45/3, 511-518. https://doi.org/10.2307/2297252 DOI: https://doi.org/10.2307/2297252
Hulten, Charles (2009). Growth accounting, NBER Working Paper N° 15.341, disponible en http://www.nber.org/papers/w15341 https://doi.org/10.3386/w15341 DOI: https://doi.org/10.3386/w15341
Jorgenson, Dale y Zvi Griliches (1967). The Explanation of Productivity Change, Review of Economic Studies 34/3, 249-283. https://doi.org/10.2307/2296675 DOI: https://doi.org/10.2307/2296675
Kejsefman, I. y Maito, E. (2022). Tendencias de la inversión en la industria manufacturera argentina en el largo plazo, DT 11 Centro de Estudios para la Producción XXI. https://www.argentina.gob.ar/sites/default/files/2021/09/dt_11_-_tendencias_de_la_inversion_en_la_industria_argentina.pdf
Kendrick, John (1961). Productivity trends in the United States, Princeton University Press, Princeton. https://www.nber.org/system/files/chapters/c2234/c2234.pdf
Kendrick, John (1976). The formation and stocks of total capital, National Bureau of Economic Research.
Lipsey, Richard y Kenneth Carlaw (2004). Total Factor Productivity and the Measurement of Technological Change, The Canadian Journal of Economics 37/4, 1118-1150. https://doi.org/10.1111/j.0008-4085.2004.00263.x DOI: https://doi.org/10.1111/j.0008-4085.2004.00263.x
Lucas, Robert (1970). Capacity, Overtime, and Empirical Production Functions, American Economic Review, Papers and Proceedings 60/2, 23-27.
Lucas, Robert (1988). On the mechanics of economic development, Journal of Monetary Economics 22, pp. 3-42. https://www.sfu.ca/~kkasa/lucas88.pdf https://doi.org/10.1016/0304-3932(88)90168-7 DOI: https://doi.org/10.1016/0304-3932(88)90168-7
Manuelli, Rodolfo y Ananth Seshadri (2014). Human Capital and the Wealth of Nations, American Economic Review 104/9, 2736-2762. https://www.aeaweb.org/articles/pdf/doi/10.1257/aer.104.9.2736 https://doi.org/10.1257/aer.104.9.2736 DOI: https://doi.org/10.1257/aer.104.9.2736
Marx, Karl (1968). El Capital, Fondo de Cultura Económica, México
McCombie, John (2000). The Solow Residual, Technical Change, and Aggregate Production Functions, Journal of Post Keynesian Economics 23/2, 267-297. https://doi.org/10.1080/01603477.2000.11490280 DOI: https://doi.org/10.1080/01603477.2000.11490280
Nelson, Richard (1964). Aggregate Production Functions and Medium-Range Growth Projections, American Economic Review 54/5, 575-606.
Phelps Brown, E. (1957). The Meaning of the Fitted Cobb-Douglas Function, Quarterly Journal of Economics 71/4, 546-560. https://doi.org/10.2307/1885710 DOI: https://doi.org/10.2307/1885710
Reati, Angelo (2001). Total factor productivity. A misleading concept, BNL Quarterly Review 218, 314-332. https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/download/9935/9817/12169
Robinson, Joan (1974). La función de producción y la teoría del capital, Investigación Económica 33/129, 143-158.
Romer, Paul (1986). Increasing Returns and Long-Run Growth, The Journal of Political Economy Vol. 94, No. 5, 1002-1037. http://www.columbia.edu/itc/sociology/watts/g9058/client_edit/romer.pdf https://doi.org/10.1086/261420 DOI: https://doi.org/10.1086/261420
Shapiro, Matthew (1996). Macroeconomic Implications of Variation in the Workweek of Capital, Brookings Papers on Economic Activity 2, 79-119. https://doi.org/10.2307/2534620 DOI: https://doi.org/10.2307/2534620
Shaikh, Anwar (1974). Laws of production and laws of algebra, the Humbug production function, Review of Economics and Statistics 56, 115-120. http://gesd.free.fr/shaikh80.pdf https://doi.org/10.2307/1927538 DOI: https://doi.org/10.2307/1927538
Solow, Robert (1956). A Contribution to the Theory of Economic Growth, The Quarterly Journal of Economics, Vol. 70, No. 1, 65-94. http://piketty.pse.ens.fr/les/Solow1956.pdf https://doi.org/10.2307/1884513 DOI: https://doi.org/10.2307/1884513
Solow, Robert (1957). Technical Change and the Aggregate Production Function, The Review of Economics and Statistics, 39/3, 312-320. http://www.piketty.pse.ens.fr/files/Solow1957.pdf https://doi.org/10.2307/1926047 DOI: https://doi.org/10.2307/1926047
Solow, Robert (1974). La función de producción y la teoría del capital, Investigación Económica 33/129, 159-169.
Syverson, Chad (2011). What determines productivity?, Journal of Economic Literature 49/2, 326-365. https://doi.org/10.1257/jel.49.2.326 DOI: https://doi.org/10.1257/jel.49.2.326
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Esteban Maito
This work is licensed under a Creative Commons Attribution 4.0 International License.
This licence allows third parties to share (copy and redistribute the material in any medium or format) and adapt (remix, transform and create from the material for any purpose, including commercial purposes), provided that authorship and first publication in this journal (The Journal, DOI of the work) is acknowledged, a link to the licence is provided, and it is stated whether changes have been made to the work.
