Sources and Determinants of Total Factor Productivity Growth in Albania and other Transition Economies

This work applies stochastic frontier methodology to analyze the sources and determinants of output growth in Albania and other 23 transition economies over the period 1980-2006. Empirical investigation reveals that TFP growth is important in explaining output growth, whereas input accumulation does not appear to play an important role in growth performance. In addition, the article demonstrates that technological change and efficiency are important components of TFP growth. The work shows that human capital, quality of institutions and trade liberalization have statistically significant and economically relevant effects on the technology catch-up.