Sources of long-run economic growth: Algeria versus south Korea 1990-2018

Abstract

This paper examines the sources of economic growth in Algeria and South Korea from comparative perspective to identify the key drivers of their economic performance during the period of 1990-2018.For this purpose, we uses the augmented growth accounting framework to decompose the aggregate economic growth into the contribution of various inputs (capital and labor) and the total factor productivity (TFP).The estimate results show that Korea has maintained high growth rates thanks to its ability to sustain both the high rates of capital accumulation and productivity(TFP) growth. Compared to Korea, the growth performance of Algeria has been weak and disappointing for decades mainly due to labor growth with weak gain in capital accumulation and sharp losses in TFP. Analyzing the proximate sources of Algeria's economic growth performance is a first step towards determining what needs to be done to promote growth in a more sustainable manner.