| Standard neoclassical economic theory considers only the production factors labor and capital. Frequently, analyses of the causes of economic growth then reveal that most growth cannot be explained by growth in these inputs, and attribute the unexplained residual to technological progress. Recent research however shows that, for industrialized countries, the inclusion of energy as a factor of production eliminates the need to rely on technological progress as an explanatory force in economic growth. I use a human capital-augmented Cobb-Douglas KLE production function to test the hypothesis that energy is a significant production factor, and use the estimated output elasticities in a standard growth-accounting framework to estimate the degree to which factor-independent technological progress has occurred, for eight developing and newly industrialized countries (NIC's) in Latin America and East Asia, respectively, over the period 1970--95. I find that for most countries, energy is a statistically significant and the most important input factor, and further, that factor-independent technological progress is negligible. |
