These measures are not independent of each other. For example, it is possible to identify
various driving forces behind labour productivity growth, one of which is the rate of MFP change.
This and other links between productivity measures can be established with the help of the economic
theory of production.
of production.
9. Once productivity measures are conceptualised on the basis of economic theory, there are
several ways to go about their empirical implementation. From a broad methodological viewpoint,
parametric approaches can be distinguished from non-parametric ones. In the first case, econometric
techniques are applied to estimate parameters of a production function and so obtain direct measures
of productivity growth. In the second case, properties of a production function and results from the
economic theory of production are used to identify empirical measures that provide a satisfactory
approximation to the unknown “true” and economically defined index number. The growth accounting
approach to productivity measurement is a prominent example for non-parametric techniques.