Page - (000038) - in Disrupted Development and the Future of Inequality in the Age of Automation

28 L. SCHLOGL AND A. SUMNER Figure 3.3 make estimates of the decomposition of growth by factors of production. And Fig. 3.4 shows labour productivity trends. Figure 3.3 shows that capital accumulation (physical capital stock) played a major role in East Asia, and that role has been increasing over time which suggests an increase in the capital intensity of growth. Initially, this was mixed largely with labor input and human capital stock but as this diminished over time, total factor productivity (TFP) took a more significant role in growth. In short, capital accumulation played a major role in East Asia over the entire period, while labor and human capital were gradually replaced with TFP from the mid-1980s onwards. In contrast, capital accumulation is rel- atively less important to growth in the other regions. In South Asia, capital accumulation becomes more important over time, whereas in sub-Saharan Africa it becomes less so. What is of interest here is the apparent either/or question of labor input and productivity. Growth is either physical capital plus labor absorption-driven or capital plus productivity-driven. This means that when TFP rises the labor input share tends to shrink and vice versa.4 Figure 3.4 shows labor productivity over the period by sector. It is not surprising to find a large increase in labor productivity in East Asia’s manufacturing sector, given the inter-sectoral shifts away from agricul- ture to manufacturing. However, the labor productivity gains in other ϬϱϭϬϭϱϮϬϮϱϯϬϯϱ ϰϬϰϱ Ϭ ϭϬϬϬ ϮϬϬϬ ϯϬϬϬ ϰϬϬϬ ϱϬϬϬ DĞƌĐŚĂŶĚŝƐĞ ĞdžƉŽƌƚƐ ĂŶĚ ŝŵƉŽƌƚƐ ' W ƉĞƌ ĐĂƉŝƚĂ ;ϮϬϬϱ ĐŽŶƐƚĂŶƚ ƉƌŝĐĞ͕ ϮϬϬϱ h^ ΨͿ > ;ĞdžƉŽƌƚƐͿ^^ ;ĞdžƉŽƌƚƐͿ^ ;ĞdžƉŽƌƚƐͿ ;й ŽĨ ' WͿ ;ĞdžƉŽƌƚƐͿ ;ŝŵƉŽƌƚƐͿ > ;ŝŵƉŽƌƚƐͿ^^ ;ŝŵƉŽƌƚƐͿ^ ;ŝŵƉŽƌƚƐͿ Fig. 3.6 Trade shares, 1961–present (or available years). Source Author’s calcu- lation based on Timmer et al. [2015]