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domestic efforts for developing new technologies, in the explanation of productivity
growth in the most advanced countries during the second half of the XX th century. To
measure the domestic efforts we will use two variables: the stock of patent generated by
the residents and a variable for human capital. These two variables jointly represent the
capacity for generating innovations into the country and are directly related with the
development of conditions that made competition more credible and investment for
increasing productivity more necessary.
3. Empirical framework
The empirical model used in our empirical analysis is the model proposed by CH
and extended by Engelbrecht (1997) by adding a human capital. This model can be
represented as follows:
logTFP it
= α 0 + α d log S it d + α mf m it
log S it
f
+ α H log H it
+ ε it
(1)
where TFP it is total factor productivity for country i and year t, S it
d
is the stock of
f
domestic patents, S it
represents the imports of technology, mit is the propensity to
import (measured as the fraction of imports to GDP), H it is the domestic stock of human
capital and ε it is a disturbance term. The model is estimated both with and without m.
In what follows we describe the procedure taken to calculate each of the
variables that enter in the model.
3.1. Measurement of total factor productivity
The construction of TFP uses a homogeneous Cobb-Douglas technology
function, where the factor shares are allowed to vary over time and across countries:
TFP
it
=
K
β
it
Y
it
(1−
β )
it
* L
(2)
where Y it is real GDP, K it is capital stock, L it is employment and β is the share of capital
in total income. To calculate TFP it we take the value of β from the Groningen Growth
Development Centre (GGDC) Database. GDP is calculated at 1985 PPP and expressed
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