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GDP growth in the GCC has been considerably higher than in advanced economies or other oil exporters since 1986. The paper shows that the GCC countries have swiftly accumulated large stocks of physical capital but the population increase and the shift away from oil meant that capital intensity actually decreased or remained roughly constant. On the other hand, the efforts that have been made to improve human capital would have had positive effects on growth, though educational attainment remains below what is achieved by countries with similar levels of income. A growth accounting exercise suggests as a result that the development of Bahrain and Saudi Arabia was hampered by declining TFP, while TFP growth in Qatar and the U.A.E. would have been low. One potential explanation is that the kind of capital that has been accumulated in the region (aircraft, computer equipment, electrical equipment) is not fully productive because the labor force is not educated enough. The paper also discusses the lessons from the empirical growth literature for the GCC. The poor quality of institutions and the large size of government consumption, both of which are possible symptoms of a resource curse, could explain the disappointing TFP growth.

This paper develops a model in which idea‐rich, cash‐poor entrepreneurs undertake risky investment projects that are subject to future liquidity needs and shirking due to moral hazard. The model suggests that the strength of the entrepreneur's incentive to shirk is countercyclical and that endogenous shirking adds volatility to the economy by increasing the persistence and volatility of TFP. This increase in persistence and volatility is driven by the variation in the number of successfully completed projects, compounded by the effect of the incentive to shirk on access to credit; changes in factor employment play only a minor role.

The findings of low or even negative total factor productivity (TFP) growth in Singapore's manufacturing industries by Young (1995) and many others has been a controversial issue in view of its crucial role in the future sustainability of Singaporean manufacturing. This paper applies the varying coefficients frontier model to re-examine productivity growth in Singapore's manufacturing at the 3-digit industry level over the period 1970–1997. The results indicate that Singapore's manufacturing has on average experienced a –0.8 percent TFP growth per annum although the extent of TFP growth improved slightly in the 1990s. The decomposition of TFP growth into technical efficiency change and technological progress, found technological regress is responsible for the negative TFP growth. Factor accumulation remains the principal contributor to the economic miracle of Singapore's manufacturing industries.

Non-clearing goods markets are an important driver of capacity utilisation and total factor productivity (TFP). The trade-off between goods prices and household search effort is central to goods market matching and therefore drives TFP over the business cycle. In this paper, I develop a New-Keynesian DSGE model with capital utilisation, worker effort, and expand it with goods market search-and-matching (SaM) to model non-clearing goods markets. I conduct a horse-race between the different capacity utilisation channels using Bayesian estimation and capacity utilisation survey data. Models that include goods market SaM improve the data fit, while the capital utilisation and worker effort channels are rendered less important compared to the literature. It follows that TFP fluctuations increase for demand and goods market mismatch shocks, while they decrease for technology shocks. This pattern increases as goods market frictions increase and as prices become stickier. The paper shows the importance of non-clearing goods markets in explaining the difference between technology and TFP over the business cycle.