What is growth accounting?

Accounting Growth is a methodology presented by American economist Robert Solow for the first time. This methodology is commonly used by economists to measure roles that play different factors in economic growth. It can also be used to analyze future long -term growth patterns based on a number of changes in the global economic environment. It has therefore become an important tool in economic analysis and helped find out what production strategies help to increase economic growth. Two of these components, capital and work directly control observable growth or decline in the economy according to the rules of the growth accounting model. On the other hand, productivity of the total productivity of factors is not directly observable. Thus, other techniques must be used to take into account the overall productivity of the factors, which will be explained to the growth accounting is based on the proportion of growth. As far as the proportional level of capital growth, work and overall economic production is known, the Growth Accounting Equation is able to calculateT level of growth of total productivity of factors. This is an extremely important function of growth accounting, because the overall productivity of the factor is unnoticeable and must be calculated mathematically.

Any part of the gross domestic product (GDP), which are the result of an unnoticeable aspect of the total productivity of factors, are called the remnants of Solow. These residues can be attributed to technological progress that leads to an increase in productivity. Technology in growth accounting is not limited to machinery, but also includes work organization, government regulation and literacy level. Thus, technological advances are very freely defined, allowing more factors to be included. In addition, with technological progress, manufacturers and manufacturers are able to get a larger output with the same amount of input, leading to a much higher productivity level.

Growth Accounting is a technique, toThe target has been applied to virtually every economy in the world. By using this method, we are able to observe how governments can stimulate growth through domestic policy changes. The most common observation is that not all economic growth can be taken into account by changes in capital, population, workforce and other directly observable factors. In fact, freely defined technological progress increases productivity level. This increase eventually leads to economic growth at national level.