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Procedia Economics and Finance 38 (2016) 308 – 317

Istanbul Conference of Economics and Finance, ICEF 2015, 22-23 October 2015, Istanbul,
Turkey

Economic Growth and Input Use Efficiency in Low, Upper -Middle

and High Incomed Countries (1991-2011): A Data Envelopment
Analysis
Ertugrul DELIKTASa, Gülçin GÜREL GÜNALb*
a
Ertuğrul DELIKTAŞ, İzmir, 35100, Turkey
b
Gülçin GÜREL GÜNAL İzmir, 35100, Turkey

Abstract

This paper tries to examine the relationship between the input use efficiency and economic growth for low income, upper-middle
income and high income countries over the period 1991 to 2011 using data envelopment analysis (DEA). Input (labor, capital and
energy) use efficiency may be defined as the ratio of input use to gross domestic product. However, this ratio or measurement is
not a good indicator of input use efficiency. Improvements in input use refer to a reduction in input used for a given output or
GDP, then they indicate input use efficiency. Hence, either deterministic (DEA) or non-deterministic (stochastic frontier
approach) approaches within the framework of production theory have been used to measure input use efficiency. This paper also
aims to make some policy implications on input use efficiency.
© 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
© 2015 The Authors. Published by Elsevier Ltd.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-reviewunder
Peer-review underresponsibility
responsibility
of of
thethe International
Organizing Strategic
Committee Management
of ICEF 2015. Conference.

Keywords: Economic growth, input efficiency, low-middle and high- income countries, data envelopment analysis

1. Introduction

Economic growth may cause living standards to improve. Growth is the fundamental objective of a society
because it lifts people out of poverty and enhances the quality of their lives. In particular, ensuring steady economic
growth is very important to build long term poverty reduction. Briefly stated, positive improvement in
macroeconomic indicators are influenced by positive rates of economic growth. However, economic growth may
also erode traditional values and lead to exploitation, environmental destruction, and corruption (Case, Fair and
Oster, 2011). Therefore, examination of the economic growth across countries has become one of the important
study subject over the last decades (Deliktas and Balcılar, 2005).

*
Gülçin GÜREL GÜNAL Tel.: +90-555-558-56-14; fax: +90-232-311-40-10.
E-mail address: gulcin.gurel@ege.edu.tr

2212-5671 © 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the Organizing Committee of ICEF 2015.
doi:10.1016/S2212-5671(16)30204-0
 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317 309

Economic growth is mainly depends on having more resources or inputs, using available resources or inputs more
efficiently, technological change (or advance), and good governance. Therefore, the main aim of this study is to
analyze the relationship between input use efficiency and economic growth for the 36 low, upper-middle, and high
incomed countries during the years 1991-2011. The input efficiency and its effect on economic growth have recently
received a great deal of attention from academia. Input efficiency analyses are generally studied by academic
scrutiny and are aimed to optimize the input use and to address specific research questions on economic growth.

In the literature, the basic economic growth model is based on Solow model. In this model, the causes of
economic growth are labor and capital. However, explanation of economic growth with basic model is inadequate.
Under today’s economic condition, natural resources should especially be examined in the growth models. Beside
that, although natural resources have a big impact on economic growth in the recent period, this impact has been
unobserved in the growth models. In this context, Solow extends the model and this model explain the possibility of
sustainability with exhaustible and nonrenewable natural resources and without costs (Stern, 2011; 34). Add to this,
according to neoclassical model capital, labor and energy are considered as inputs on economic growth (Zhou et al,
2012; 197).

The ongoing debate about growth models have been based on the relationship between economic growth and
natural resources, especially energy led to the emergence of a new view. The view suggests that energy is the main
source of value because labor and capital cannot do without energy (Ghali and El-Sakka, 2004; 225). Although many
economists stated the role and importance of energy as an input on growth in their studies during twentieth century,
a systematical approach to them has emerged in 21st century (World Energy Outlook, 1998 and 2000). Moreover, in
the 21st century, the World Energy Outlooks have suggested the increasing demand to use energy sources and its
effect on growth.

Besides that, the roots of input efficiency concept date back to the twentieth century, the quantitative analyses
have risen at the beginning of 21st century due to the emergence of the new empirical methods. One of the attempts
to analyze input efficiency empirically came from Piesse and Thirtle (2000). This study using the Stochastic Frontier
Analysis detects the efficiency level during the period of 1985-1991 for Hungary. Further, Hu and Wang (2006)
analyze the input efficiencies of 29 regions in China for the period 1995–2002 using the DEA. Another remarkable
study is from Zhou, Ang and Poh (2008), who present a literature survey to show whether the method of DEA is
convenient for measuring the input efficiencies or not. Zhang et al (2011) aim to analyze the input efficiencies in 23
developing countries during the years 1980-2005 using the DEA. They employ a Tobit Model to indicate the
relationship between energy efficiency and income per capita. This study suggests that there is a U-Shape
relationship between the energy efficiency and income per capita. Moreover Zhou et al (2012) use a parametric and
nonparametric frontier approach in order to measure input efficiency performance in some OECD countries for the
year 2001. This study allows the possibility to compare two different methods. Following this study Song et al
(2013) present the input efficiencies of BRICS using the DEA. Add to this, the relationship between energy
efficiency and carbon emission is analyzed for the years between 2009 and 2010.

In the recent years, there have been many studies such as, Filippini and Tosetti (2014), Lundgren at al (2014) and
Miao and Jin (2014) focusing on OECD countries or national or regional economies for a certain country. All the
studies analyze the input efficiency and its determinants by using Stochastic Frontier Analysis or Data Envelopment
Analysis.

Following these studies, we present a nonparametric mathematical approach, the DEA, to measure input
efficiency in low, upper-middle and high income countries over the period 1991-2011.

The DEA gives us the best-practice production frontier based on explanatory variables, such as capital, labor, and
energy and the explained variable, such as the real GDP of each country. The best approach of frontier analyze
explains if the countries are on or in the frontier, it shows the efficiency while the gap from the frontier indicates
inefficiency. The efficiency level of countries can change in time and the “catch up” effect or the shift effect of
310 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317

frontier shows technical change. Besides, the movement all along the frontier can be observed because of the change
of input used in production. Economic growth can be evaluated in the context of three constituents as efficiency
change, technical change, and input change. Efficiency and technical changes are usually mentioned as part of “total
factor productivity change” (Osiewalski et al. 1998).

This paper examining the relationship between the input use efficiency and economic growth for low income,
upper-middle income and high income countries using DEA has some important contributions. First, this paper
allows the opportunity to compare three different income level countries in the studies on input efficiency and its
effect on growth. Second, this paper differs from the input efficiency literature by analyzing the correlation between
energy efficiencies and economic growth within the low, upper-middle and high income countries.

The rest of paper includes section of data, methodology, empirical findings, and conclusion.

2. Data Envelopment Analysis

2.1. Data and Variables

The data used in this study are economic growth rate, real GDP (constant 2005 US dollar) employment (total),
capital stock (constant 2005 US dollar), and energy use (kt of oil equivalent) for each country. The data covers the
years of 1991-2011 for all 36 countries (low-income (8), upper-middle income (8), and high income countries (20)).
The data includes 756 observations in total. The selections of the countries are based on the availability of data for the
level of income groups. Real GDP and energy use are obtained from the database of World Bank. Growth rate,
employment and capital stock are collected from Penn World Table 8.1 (2015). The summary statistics of data
(variables) for income group countries are given in Tables below.

Table 1. Summary statistics of variables the low income countries (1991-2011)

Variable Unit Mean Std. Min. Max

Capital Stock billion 1007,60 1800,52 38,81 10299.89

Labor Force million 69,22 131,41 1,08 495,75
Energy kt of oil equivalent 91780,52 163794,49 2543,94 749446,65
GDP billion 140157,96 248161,29 2079,15 1326235,10

Table 2. Summary statistics of variables for the upper-middle income countries (1991-2011)
Variable Unit Mean Std. Min. Max.

Capital Stock billion 1193,44 1668,99 24,47 6420,66

Labor Force million 19,33 26,82 0,46 101,32

Energy kt of oil equivalent 59808,87 72670,87 1490,88 270027,53

GDP billion 266170,90 338402,72 4784,21 1126722,91

Table 3. Summary statistics of variables for the high income countries (1991-2011)
Variable Unit Mean Std. Min. Max

Capital Stock billion 4241,92 7684,95 12,26 40926,44

Labor Force million 19,43 30,98 0,13 147,80

Energy kt of oil equivalent 217072,71 465703,40 664,86 2337013,73

GDP billion 1417661,11 2558188,67 3412,40 10140519,31

 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317 311

Table 1, table 2 and table 3 show the statistical values of variables for the level of income groups. According to
tables, compared with the 3 different income groups, the mean of the GDP and Capital Stock are larger in high income
countries. However high income countries own the minimum values of labor force for the period of 1991-2011.

2.2. Methodology

In this study, Data Envelopment Approach (DEA) based on the Malmqüist TFP indices is used to measure the
efficiency levels of different income group countries. The Malmqüist indices suggested by Caves et al., (1982) provides
to present the indices of technical efficiency change and technological change with using distance functions. The
distance functions can be formed as an input-oriented or output-oriented.

The input distance function can be defined on the input set, as (coelli, Rao, and Battaese, 1998). :

d i ( x, y ) max{U : ( x / U )  L( y )} (1)

Where the input set L(y) presents the set of all input vectors, x, which can produce the output vector, y. That is,

L( y ) ^( x : x can produce y`. (2)

The distance function is the opposite of Farrel’s study (1957). This function, that measures the distance for an
observation from the technology frontier, means “technical efficiency”.

Distance is explainable by the following equations;

D0t ( xt , yt ) 1 ( xt , y t )
if and only if is on the frontier of the technology,
D ( xt , y t ) d 1
t
0 ( xt , y t )  R t
if and only if (Karadag et al. 2005).

The input oriented approach describes technical inefficiency as part of proportional reduction in input usage while
output levels are held constant. DEA comparatively calculates the efficiency of the decision making units as the ratio
the sum of their weighted outputs to the sum of their weighted inputs. The relative efficiency measure can be defined as
follows:
n

u1 y1 j  u 2 y 2 j  u 3 y3 j  ................... u n y nj  ¦
r 1
u r y rj
TE j
v1 x1 j  v 2 x 2 j  v3 y 3 j  ................ v n x nj  m

¦v x
s 1
r sj

¦ u r y rj
Subject to
r 1
m
d1 (3)
¦v x
s 1
r sj

ur , v j ,H ! 0
312 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317

where ϵ is a very small constant, which is forces all inputs and outputs to have non-zero weights (El Mahgay and
Lahdelma, 1995); TEj is the technical efficiency score of a given unit j, x and y indicate input and output and v and u
denote input and output weights, respectively; s is the number of inputs and r is the number of outputs and j shows jth
DMUs.

Malmquist index of productivity change or total factor productivity (TFP) change during the period of “t - t+1”is
measured as (Fare et al., 1994).

1/ 2
ª§ D0t 1 ( x t 1, y t 1 ) ·§ D0t ( x t 1, y t 1 ) ·º
«¨¨ ¸¨ t 1 ¸»
t ,t 1
MTFP 0 ( x t , y t , x t 1, y t 1 ) t ¸¨ ¸ , (4)
¬«© D0 ( x t , y t ) ¹© D0 ( x t , y t ) ¹¼»

D0t 1 ( xt , y t )
As the equation 4, specifies the distance from the period t observation to the period t+1 technology.

The TFP change has two components, namely efficiency change and technological change (see Nishimizu and Page
1982; and Fare et al., 1994, for pioneering studies). It is defined as:

1/ 2
t ,t 1 D0t 1 ( x t 1, y t 1 ) ª D0t ( x t 1, y t 1 ) D0t ( x t , y t ) º
MTFP 0 ( x t , y t , x t 1, y t 1 ) x «( t 1 )x ( t 1 » (5)
D0t ( x t , y t ) «¬ D0 ( x t 1, y t 1 ) D0 ( x t , y t ) »¼

The indicator of technical efficiency change (EC) is represented by the equation (5). EC is explained within the first
term on the right side of equation (5). This change indicates the convergence or catch-up performance of the country to
the best-practice frontier if we compare the technical efficiency measure in period t+1 with respect to period t. The
second term in brackets on the right-hand side of equation (5) shows technological change (TC) in time. Then the
equation (5), that measures total factor productivity change, can be written as an equation of (6).
TFP0t ,t 1 EC ˜ TC .
(6)

When we explain the meaning of all terms in the equation (6);

MTFP0t ,t 1 ! 1
If ; there is an increasing productivity from t to t+1.
t ,t 1
MTFP 0 1
If ; there is a decreasing productivity from t to t+1.
t ,t 1
MTFP 0 1
If ; there is no change in the productivity level from t to t+1.

If EC > 1 ; the country is catching up the best-practice frontier from period t+1 to period t.
If EC < 1 ; the country is falling behind of the best-practice frontier.
If EC = 1 ; the country has not improved its position with regard to the best-practice frontier between two periods.
If TC > 1 ; there is a technical progress.
If TC < 1 ; there is no technical progress ( technical regress ) (Deliktas and Balcılar, 2005).

There has been a broad literature about the application of DEA methodology. In the context of applied DEA, TFP
changes have particularly been calculated. Charnes et al., 1995, and Seiford, 1996, give extensive review of DEA
methodology. Besides, panel data applications of DEA methodology have widely been used in the literature (see for
example, Milan and Aldaz, 2001; and Singh et al., 2000, Deliktaş 2002, Deliktaş and Balcilar, 2005, Karadag et.al,
2005, Deliktas et al. 2005, Angeriz et al. 2006).
 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317 313

The input-oriented DEA model in this study, has deeply been concerned by Coelli et al., 1998, can be put into a
form. When we consider N industries and each industry is producing a single output by using K inputs, xit is a column
vector of inputs, while yit is a scalar representing the output for the i-th industry. X represents the K u NT matrix of
inputs and Y represents 1u NT matrix of output. The input-oriented DEA model is given by;

min T ,O T ,
subject ..to
 y it  YO t 0,
(7)
Txi  XO t 0,
N1cO 1
Ot0
The equation of N1cO 1 shows the convexity constraint in variable returns to scale case. This guarantees a non-
productive firm that can be reported only “benchmarked” against firms of an analogous size. It is possible for a firm to
be benchmarked against significantly larger or smaller firms in a constant returns to scale, because in the constant
returns to scale, the convexity restriction is not constrained. Later on, the weights ( O ) will sum to a value greater than
one (Coelli, Rao, and Battese, 1998); (1d T f, O is a Nu1 vector of weights). 1/ T indicates technical efficiency score.
This score can be ranged between zero and one. Besides, the technical efficiency score can lie with a value of any point
on the frontier.

3. Empirical Results

3.1. Technical Efficiency and the Components of Total Factor Productivity Change

Table 4 shows the scores of technical efficiency (TEFF), efficiency change (EFFC), technological change (TC) and
total factor productivity change (TFPCH) and the economic growth rate for the period of 1991-2011 in the low income
countries.

Technical efficiency level is obtained using Equation (7) with the method of DEA. The technical efficiency level
should rank among zero and one. If the equation result indicates one, the result reports full efficiency and if not so, the
result reports full inefficiency for a country. In the other words, if inputs are used efficiently technical efficiency level
will be one, otherwise it will be less than one. On the other hand, the increasing efficiency (the fourth column in Table
4, 5 and 6) infers the countries success at increasing the global technology and it is presented as a catch up factor (Rao
and Coelli 1998b). Besides, the increasing efficiency shows a more efficient use as part of present inputs and
technology in time. Technological change (TC) shows a shift in the production frontier. If TC is bigger than 1, it
indicates improvement in technology, otherwise deterioration in technology.

Table 4. Input Use Efficiencies and Economic Growth Rates of Low Income Countries (1990-2011)
Variable Economic Growth % TEFF EFFC TC TFPCH
Bolivia 3,9 0,627 1.013 0.996 1.010
Georgia -0,1 0,615 0.990 1.020 1.009
India 6,6 0,694 0.999 0.993 0.992
Indonesia 4,9 0,684 0.988 0.993 0.981
Moldova -1,5 0,411 0.977 1.020 0.996
Morocco 4,0 1,000 1.000 1.003 1.003
Pakistan 4,0 0,541 1.010 0.993 1.003
Paraguay 3,1 0,757 0.995 1.001 0.995
Mean 3,1 0,666 0,996 1,002 0,995
314 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317

Overall, as seen in Table 4, the low income countries have low input use efficiency, except Morocco. The score of
TEFF is 1, which means inputs are used efficiently in Morocco during the period of 1991-2011, among its own group of
countries. Besides that, the growth rate of Morocco is comparatively higher than the other low income countries.
However the scores of EFFC, TC and TFPCH are generally low.

Table 5. Input Use Efficiencies and Economic Growth Rates of Upper-Middle Income Countries (1990-2011)
Economic Growth
Variable TEFF EFFC TC TFPCH
%
Brazil 3,2 0,736 0.994 1.007 1.001
Costa Rica 4,8 0,966 0.998 0.996 0.994
Jordan 5,6 0,389 1.002 1.015 1.017
Macedonia 1,2 0,527 0.983 1.017 1.000
Mexico 2,8 0,977 0.997 1.007 1.004
Panama 5,9 0,940 1.003 1.004 1.007
Romania 1,5 0,443 1.016 1.008 1.025
Turkey 4,1 1,000 1.000 1.005 1.005
Mean 3,6 0,747 0,999 1,007 1,006

As it can be seen, results in the table 5 are similar with the low income countries. In the context of 8 upper-middle
income countries, there is inefficiency of input use, except for Turkey. Although in almost all countries, TC increased
slightly, however it didn’t have an impact on input efficiency. Additionally, the input use is efficient in Turkey
considering its own group of countries. However this suggestion is not valid if we consider all world in the context of
this analyze.

Table 6. Input Use Efficiencies and Economic Growth Rates of High Income Countries (1990-2011)
Economic Growth
Variable TEFF EFFC TC TFPCH
%
Australia 3,13 0,560 1.000 1.011 1.011
Austria 2,12 0,756 1.002 1.008 1.010
Chile 5,19 0,505 0.988 1.004 0.992
Denmark 1,68 0,911 1.005 1.005 1.010
Finland 2,09 0,665 1.007 1.010 1.017
France 1,68 0,724 1.000 1.009 1.010
Germany 1,56 0,710 1.001 1.000 1.001
Italy 0,98 0,765 0.997 1.008 1.005
Japan 0,90 0,679 1.000 1.008 1.008
Korea, Rep. 5,45 0,455 0.987 0.998 0.986
Latvia 0,62 0,324 0.992 1.002 0.994
Malta 3,38 0,543 1.002 1.002 1.004
Netherlands 2,26 0,773 1.002 1.003 1.005
Norway 2,55 1,000 1.000 1.008 1.008
Saudi Arabia 4,24 0,384 0.999 1.008 1.006
Singapore 6,53 0,445 1.015 1.006 1.021
Sweden 2,18 1,000 1.000 1.004 1.004
Switzerland 1,56 1,000 1.000 1.007 1.007
United Kingdom 2,06 0,990 1.000 1.002 1.003
United States 2,51 0,725 1.007 1.011 1.018
Mean 2,63 0,696 1,000 1,006 1,006
 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317 315

Table 6 shows that the scores of TEFF is 1 for the countries of Norway, Sweden and Switzerland during the period
1991-2011. This result indicates that inputs are used efficiently in that countries. Add to this, almost all countries’
scores of TC and TFPCH are more than 1. This shows, there is a progress in technology and productivity. It means that
positive technological change effects productivity and input use.

In general, the input use of high income countries are more efficient than the input use of the low income and upper-
middle income countries. However the growth rates of low income countries are comparatively higher. It means that the
growth in low income countries relying on input use rather than input efficiency. Add to this, the economy of high
income countries is almost near the full capacity, therefore the growth rate of high income countries are comparatively
lower. The reason for this is that these countries are more developed.

3.2. Relationship between technical efficiency and economic growth

Analyzing the relationship between input use efficiency and economic growth is important, because it is expected
that input use efficiency may have a positive impact on economic growth. Table 7 indicates the mean of the economic
growth, TEFF, EFFC, TC and TFPCH and the correlation coefficients between economic growth and the EFFC,
economic growth and TC, and economic growth and TFPCH during the period of 1991-2011. According to the results,
there is a slight progress in technology and a decline in productivity in low income countries. Additionally, this, the
value of economic growth in low income countries is moderate. The result show that these countries are not developed
countries and their economies are far from the full capacity, as expected. It means the economic growth is based on the
amount of input use and positive technological change has a little impact on economic growth. Therefore the correlation
coefficients between economic growth and EFFC, TC, TFPCH are negative.

As seen from Table 7, there is a progress in technology and productivity in upper-middle income countries.
However, although there is technological improvement, the correlation coefficient between economic growth and TC is
negative. The reason of this is the structure of the production which is based on the amount of input, rather than
technological change. Moreover, the effect of amount of labor and capital on economic growth is comparatively higher
in upper-middle countries.

The last column of Table 7 shows the mean of indicators and the correlation coefficients for high income countries.
The results indicate that there are progress in technology and productivity in high income countries. The last column of
Table 7 shows that the all correlation coefficients are positive. It means the economic growth relies on input efficiency
that is based on technology and productivity, rather than the amount of input use.

Table 7. Mean of the indicators and correlation coefficients between the indicators and economic growth for low, upper-middle and high income
countries (1990-2011)
Economic Economic Economic
Economic
Variable TEFF EFFC TC TFPCH Growth and Growth and Growth and
Growth %
EFFC TC TFPCH

Low income
3,1 0,666 0,996 1,002 0,995 -0,7196 -0,9503 -0,5157
countries

Upper-
middle
3,6 0,747 0,999 1,007 1,006 -0,8422 -0,2914 0,0484
income
countries

High income
2,63 0,696 1 1,006 1,006 0,7386 0,0339 0,4751
countries
316 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317

Summarily, in low income countries, the economic growth is mainly based on input use, especially labor and capital,
rather than technology. It means the input efficiency has not considerable effect on economic growth in these countries.
However, one of the production factors -technology, has a strong effect on economic growth in high income countries.
In other words, the input use efficiency relying on technology is valid in these countries.

These results verify the results on the Table 8. In general, a large amount of labor force and capital had been used in
low income countries during the period of 1991-2011. Besides that, the amount of use of labor and capital in high
income countries are at the lowest level.

Table 8. Growth rates of the inputs and the output for the years of (1990-2011)
The growth rate of The growth rate of
The growth rate of The growth rate of
number of persons Energy
Variable GDP Capital Stock 1991-
engaged Consumption 1991-
1991-2011 2011
1991-2011 2011
Low income
0,058 0,020 0,067 0,038
countries
Uppermiddle income
0,032 0,015 0,034 0,025
countries
High income
0,021 0,007 0,025 0,008
countries

4. Conclusion

This paper firstly utilizes the method of DEA to analyze input efficiency of low income countries, upper-middle
income countries and high income countries between the years of 1991-2011. Secondly it analyzes, the relationship
between the input use efficiency and economic growth for low income, upper-middle it income and high income
countries over the period 1991 to 2011 are discussed.

The results of paper indicates that economic growth rates in the low and upper-middle income countries are
comparatively higher in spite there is inefficiency in their use of inputs. However, the negative relation between the
economic growth and technological change and also the growth and total factor productivity change show that an
economical growth based on input use, rather than input efficiency. Economic growth is ensured via the amount of
inputs in high extent, on the other hand the increase in efficiency quite inadequate. The reason for the inexistence or
inadequacy of an increase in total factor productivity change stems from the limited growth motivation, low capacity for
technology improvement/transfer/usage and finally, low labor capability of the small enterprises for the high income
countries, where an input inefficiency is exists, growth rates are comparatively lower than those of other countries. The
reason for this is these countries are more developed. So that their economies almost near the full capacity of
production. Nevertheless, positive value of the technological change and total factor productivity change, shows that the
technology and efficiency is higher in these countries.

For an economy which rely on high total factor productivity change, it is required that they attach importance of
input usage especially human capital and the investment on education sector. Since, the driving force in these countries
is the increase in the usage of input, these inputs need to be supported with productive investments and these
investments should also be able to increase the employment. Finally, the firms should develop innovative activities and
this should ensure a sustainable growth due to increase the efficiency
 Ertugrul Deliktas and Gülçin Gürel Günal / Procedia Economics and Finance 38 (2016) 308 – 317 317

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