| It is well-known in economic theory that economic growth is associated with the resources of labor and capital, and their efficient use. The combined effect of the latter is measured by Multifactor productivity (MFP) that plays a major role in growth. Reflecting the growth of output that is not ascribed to labor and capital inputs, MFP captures the influence of the following factors: technological change, economies of scale, organizational efficiency, changes in the quality of inputs, and macroeconomic policies.;This study concerns sources of economic growth in Jordan for the 1971-95 period that encompass; labor, capital, and MFP. MFP has been broken down into: expenditure on education, expenditure on R&D, exports of manufactured goods, exports of primary products, government capital expenditure, and inflation. The study evaluates the efficiency of utilization and the relative contributions of labor and capital to economic growth in Jordan both at aggregate and sectoral levels. These sectors include: agriculture, mining, manufacturing, construction, and service. The study also compares the findings for Jordan regarding the utilization of labor and capital, their relative contributions to growth, and the role of MFP with those of Singapore and Tunisia.;Single productivity indexes, such as labor productivity (LP) and the incremental capital-output ratio (ICOR) were used to examine the performance of labor and capital. A production function of a Cobb-Douglas form was broken down to determine the relative contributions of labor, capital, and MFP. The multiple regression technique was used to quantify the relationship between output growth and growth of labor, capital, expenditure on education, expenditure on R&D, exports of manufactured goods, exports of primary products, government capital expenditure, and inflation. The Granger causality test was employed to determine the direction of causality between output growth and exports growth for the whole economy and for the sectors mentioned earlier.;The major findings of the study are: (a) Capital has been a major contributor to growth in Jordan, followed by labor. MFP made the least contribution, whereas MFP is the largest contributor to growth in Singapore, (b) Labor and capital are used less efficiently in Jordan than in either Singapore or Tunisia, (c) Expenditure on education, government capital expenditure, exports of manufactured goods, and exports of primary products have had an insignificant impact on growth in Jordan. At the same time, inflation was found to affect growth adversely, and expenditure on R&D was found to have a positive impact on growth, and (d) Exports have not had a significant effect on economic growth in Jordan and, at the same time, the growth of GDP failed to generate a significant expansion in the country's exports. This conclusion holds at both aggregate and sectoral levels. |
