Why do economists conduct growth accounting studies? What are the three lessons that commonly emerge from such studies? What is the full recipe for the growth of per capita GDP in an economy?

Answer 1

Since the late 1950s, economists have conducted "growth accounting" studies in order to calculate the specific portions of economic growth that are accounted for by physical capital deepening, human capital deepening, and technology. Three lessons commonly emerge from these growth accounting studies.
a . Technology is typically the most important contributor to U.S. economic growth.
b. Building human capital is at least as important as physical capital.
c. Human capital, physical capital, and technology work together to increase productivity.
Workers with a higher level of education and skills are often better at coming up with new technological innovations. These technological innovations are often ideas that cannot increase production until they are incorporated into new investment in physical capital. New machines that embody technological innovations often require additional training, which further builds worker skills. Thus, the full recipe for growth of per capita GDP would include human capital deepening, physical capital deepening, and technological gains. To be successful, however, these sources of economic growth must all occur within a supportive economic environment.