The Drivers of the Total Factor Productivity

Keywords: dynamics of Total Factor Productivity, Solow model, innovation, productivity, drivers of Total Factor Productivity


The Total Factor Productivity (TFP) is now widely recognized as an important factor in both long-term economic growth and short-term growth fluctuations. Researchers of the International Monetary Fund came to the conclusion that the growth of the TFP was the most important long-term factor in raising the living standards. Therefore, the IMF and academics from different countries has been scrutinizing the reasons for the slowdown in TFP and investigating the underlying factors. The low rates of GDP grow in Ukraine call for finding the drivers, one of which is TFP growth. It raises the importance of analysis of the factors promoting this growth in Ukraine. 

The purpose of this work is to define TFP drivers, which would be most effective for Ukraine. TFP drivers in foreign countries are analyzed, TFP dynamics for Ukraine is calculated by use of Solow model, and TFP drivers over 2000–2017 are determined.        

The analysis of publications about TFP drivers at global level shows that they include: international transfer of knowledge and technologies, activities of small innovative fast-growing firms, the enhanced quality of quality of education, the increased expenditures on R&D and innovations, especially by business sector, the increased investments in intangible assets, the intensified patent activity, access of enterprises to lending.

The TFP dynamics in Ukraine, calculated by the Solow model, is characterized by high growth rates by 2012, a sharp fall in 2013-2015, and a return to the growth path in 2016-2017, but, as in the whole world, by very moderate pace. The factors contributing to this return are capital investment in intangible assets, the increasing patent activity of Ukrainian researchers, the intensified innovation in the high-tech sector. Factors constraining the TFP and the contribution of innovation to economic growth are a significant proportion of technology transfer in the form of “know-how, agreements for the acquisition (transfer) of technologies”, which holds back the widespread introduction of cutting-edge technologies, and the reduction of funding for R&D and innovation.

Further studies should be focused on searching for political decisions promoting implementation of structural reforms aimed to solve the existing problems and eliminate their consequences, especially in of the innovation and education field.


Download data is not yet available.


Gone with the Headwinds: Global Productivity. (2017). Retrieved from

Solow, R. M. (1957). Technical Change and the Aggregate Production Function. The Review of Economics and Statistics, Vol. 39, 3, 312–320.

Brandt, L., Trevor, T., & Xiaodong, Zh. (2012). Factor market distortions across time, space and sectors in China. HKIMR Working Paper, 26. 55 p.

Аschauer, D. (1989). Is Public Expenditure Productive? Journal of Monetary Economics, 23,177–200.

Gopinath, G., Kalemli-Ozcan, S., Karabarbounis, L., & Villegas-Sanchez, C. (2017). Сapital allocation and productivity in South Europe. NBER Working Paper, 728. Retrieved from

Musina, L. A., & Kvasha, T. K. (2014). Vplyv naukovo-tekhnichnoi ta innovatsiinoi diialnosti na ekonomichne zrostannia v Ukraini, yoho chynnyky i resursy [Influence of scientific and technical and innovative activity on economic growth in Ukraine, its factors and resources]. Modeliuvannia ta informatsiini systemy v ekonomitsi – Modeling and Information Systems in Economics, 90, 136–152 [in Ukrainian].

Kolyada, Yu. V., Kravchenko, T. V., & Lipanova, Yu. V. (2014). Dyskretnyy variant modeli Solou dlya vidkrytoyi ekonomiky: modelyuvannya trayektoriy rozvytku [Discrete version of the Solow model for an open economy: modeling of development trajectories]. Modeliuvannia ta informatsiini systemy v ekonomitsi – Modeling and Information Systems in Economics, 90, 33–51 [in Ukrainian].

Kasych, A. O. (2013). Bahatofaktorna produktyvnistʹ yak indykator rivnya tekhnolohichnoho rozvytku krayiny [Multifactor productivity as an indicator of the level of technological development of the country]. Naukovi zapysky Natsionalnoho universytetu “Ostrozka akademiia”. Seriia: Ekonomika – Scientific Notes of Ostroh Academy National University, Economics series, 21, 28–33 [in Ukrainian].

Fernald, J. (2014). Productivity and Potential Output before, during, and after the Great Recession. NBER Macroeconomics Annual, Vol. 29, 1–51.

OECD Economic Surveys of Belgium. (2017). Paris, OECD publishing.

Brynjolfsson, E., & McAfee, A. (2014). The Second Machine Age: Work Progress, and Prosperity in a Time of Brilliant Technologies. New York: W. W. Norton & Company.

The Future of Productivity. (2015). Paris, OECD publishing. Retrieved from

Easterlin, R. E. (1981). Why Isn’t The Whole World Developed. Journal of Economic History, 41, 1–19.

Clark, G. (1987). Why Isn't the Whole World Developed? Lessons from the Cotton Mills. Journal of Economic History, 47, 141–173.

Coe, D. T. (2009). International R&D Spillovers and Institution. European Economic Review, 53, 723–741.

Madsen, J. B. (2007). Technology Spillover through Trade and TFP Convergence: 135 Years of Evidence for the OECD Countries. Journal of International Economics, 72, 464–480.

Falvey, R., Foster, N., & Greenaway, D. (2004). Imports, Exports, Knowledge Spillovers and Growth. Economics Letters, 209–213.

van Pottelsberghe De La Potterie, B., & Lichtenberg, F. (2001). Does Foreign Direct Investment Transfer Technology Across Borders? Review of Economics and Statistics, 490–497.

Keller, W., & Yeaple, S. R. (2009). Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States. Review of Economics and Statistics, 91, 821–831.

Eaton, J., & Kortum, S. (1996). Trade in Ideas Patenting and Productivity in the OECD. Journal of International Economics, 40, 251–278.

Keller, W. (2002). Geographic Localization of International Technology Diffusion. American Economic Review, 92, 120–142.

Storey, D. J. (1994). Understanding the small business sector. London: International Thomson Business Press.

Vital growth: The importance of high-growth businesses to the recovery. (2011). Retrieved from: library/documents/Vital_Growth_v19.pdf

Acs, Z., Parsons, W., & Tracy, S. (2008). High impact firms: Gazelles revisited. Retrieved from: 8tot.pdf

Henrekson, M., & Johansson, D. (2010). Gazelles as job creators: A survey and interpretation of the evidence. Small Business Economics, 35 (2), 227–244.

Syverson, C. (2011). What determines productivity? Journal of Economic Literature, 49 (2), 326–365.

Gaspar, V., & Jaramillo, L. (2017). Proektirovanie rosta: nalogooblozhenie i proizvoditelnost [Growth Design: Taxation and Productivity]. Retrieved from: [in Russian].

Duval R., Hong G. H., & Timmer Ya. (2017). Financial Frictions and The Great Productivity Slowdown. IMF Working Paper. Washington: International Monetary Fund.

Tackling Income Inequality Requires New Policies. (2019). Retrieved from:

Pysarenko, T. V., Kvasha, T. K., Karlyuk, H. V., & Lyakh, L. V. (2015). Innovatsiina diialnist ta yii vplyv na ekonomichnyi rozvytok v Ukraini [Innovative activity and its impact on economic development in Ukraine]. Kyiv: UkrINTEI [in Ukrainian].

Produktyvnist pratsi ta produktyvnist kapitalu [Labor productivity and capital productivity]. Retrieved from [in Ukrainian].

Pysarenko, T. V., Kvasha, T. K., Rozhkova, L. V., Paladchenko, O. F., & Molchanova, I. V. (2018). Stan innovatsiinoi diialnosti ta diialnosti u sferi transferu tekhnolohii v Ukraini u 2017 rotsi [The state of innovation activities and activities in the technology transfer in Ukraine in 2017]. Кyiv: UISTEI [in Ukrainian].

Ofitsiinyi sait Derzhavnoi sluzhby statystyky Ukrainy [Official web-site of the State Statistics Service of Ukraine]. Retrieved from [in Ukrainian].

Abstract views: 12
PDF Downloads: 14
How to Cite
Kvasha, T. K. (2019). The Drivers of the Total Factor Productivity . Statistics of Ukraine, 85(2), 12-20.