LAWRENCE-R-KLEIN-LECTURE 1997 NEEDED - A THEORY OF TOTAL FACTOR PRODUCTIVITY

This paper evaluates the argument that differences in physical and int angible capital can account far the large international income differe nces that characterize the world economy today. The finding is that th ey cannot. Savings rate differences are of minor importance. What is a ll-important is total factor productivity (TFP). In addition, the pape r presents industry evidence that TFPs differ across countries and tim e for reasons other than differences in the publicly available stock o f technical knowledge. These findings lead me to conclude a theory of Tm is needed. This theory must account for differences in TFP that ari se for reasons other than growth in the stock of technical knowledge.