Capital accumulation and TFP growth in the EU: A production frontier approach

The aim of this article is to analyse labour productivity growth and convergence in the EU between 1980 and 1997. By adopting a production frontier approach, labour productivity growth is broken down into components attributable to efficiency change, technological progress and capital accumulation. Our results point to physical and human capital accumulation as the main factors driving the processes of labour productivity growth and convergence among the European economies, supporting the European cohesion and development policies carried out in these years. On the other hand, we observe that some problems appear in the EU in terms of total factor productivity (TFP) growth. Therefore, policies aimed at promoting TFP growth should also be strongly supported.