Answer :
The factors that are most important to explain the growth of output per worker in Taiwan include TFP, capital per worker, and human capital.
This is based on the growth accounting methodology used to allocate growth in output per worker. Here is a brief explanation of each factor:
- Total Factor Productivity (TFP): TFP refers to the measure of how efficiently inputs (labor and capital) are transformed into outputs. In other words, it measures the productivity of an economy given the amount of inputs used. A higher TFP indicates that an economy is producing more with the same number of inputs or producing the same with less input. Therefore, a high TFP can lead to a higher growth rate of output per worker.
- Capital per worker: Capital per worker refers to the amount of capital available for each worker in an economy. This includes things like machinery, equipment, and infrastructure. A higher capital per worker can lead to increased productivity and output per worker since workers have access to better tools and resources.
- Human capital: Human capital refers to the knowledge, skills, and experience of workers in an economy. A highly educated and skilled workforce can lead to increased productivity and output per worker. Therefore, investments in education and training can lead to a higher growth rate of output per worker.
In conclusion, TFP, capital per worker, and human capital are all important factors that can explain the growth of output per worker in Taiwan. By focusing on these factors, policymakers can work to improve the productivity and competitiveness of the economy.
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