I. Introduction
Countries experience marked differences in the development of their productive capacities and in
the improvement of their standards of living. While some countries achieve rapid growth of
income and high standards of living, others remain mired at a level of development that does not
assure the subsistence needs of the population. Several theoretical models explain the growth
rate of a country’s real GDP per capita. Dispute still exists, however, concerning the most
important determinants of economic growth. While some think that physical capital
accumulation plays the dominant role, others argue that growth in total factor productivity (TFP)
provides the dominant source of output growth.