International Business Economics Essay Example | Topics and Well Written Essays - 4000 words - 2

International Business Economics - Essay Example This concept was later popularized in the work of Solow (1957 cited in Prescott, 1998) who had established that the economic growth models which suggest that growth occurs exclusively from an accumulation of resources is unlikely to be permanent and enhancement of productivity is fundamental to generate economic growth. Therefore, there is no singularity in the opinion of researchers regarding the determinants of growth yet there is no denying the fact that TFP is important for economic growth. There is now a growing consensus among researchers that much of the differences between income per capita between the developing and the developed countries can be accredited to TFP differences. The concept of TFP is quite broad and it includes a number of factors like education, health, and skills of the entire human technology, utilization of technology possessed by a country and the absorptive capacity of the economy (Miles and Scott, 2005). Therefore, this essay studies the link between TF P and human capital, TFP and technological progress and finally determines the impact it has on the overall economic growth of the nation. This paper first introduces the concept of TFP, the way in which it can be measured and its main determinants. Then the relation of TFP with human capital and technology is explained in details. Finally, the impact that TFP has on the economic growth is discussed. The burgeoning literature on the South East Asian countries and its growth determinants has also been studied to understand the role of TFP. There are two primary factors for which the concept is aligned to a neoclassical one namely productivity is measured for every factor of production and it has been integrated with the production function. The basic definition of TFP remains same in the works of most of the researchers who observe it as a ratio between net output and the factor inputs.