Technological progress and economic dynamics: Unveiling the long memory of total factor productivity

Abstract

This study aims to explore the dynamics of total factor productivity (TFP) in 40 advanced economies and its implications for economic stability, growth patterns, and technological integration. Understanding the concept of long memory in TFP is crucial in comprehending the diverse paths of economic development and technological advancement in different nations. The study endeavors to clarify the concept of long memory in TFP and analyze its impact on economic stability, growth patterns, and technological integration on a global scale. The research employs a sophisticated methodological framework that integrates a combination of unit root tests, non-parametric methods, fractional integration techniques, and ARFIMA models. This multifaceted approach provides a nuanced understanding of the persistence in TFP series and helps distinguish between stable and mean-reverting TFP dynamics across different nations. The analysis highlights the varying trajectories of TFP across these economies, which sheds light on the diverse paths of economic development and technological advancement. The findings of this research are pivotal in comprehending the role of TFP in shaping growth convergence, influencing business cycle fluctuations, and technological progress. The study contributes to policy discourse by proposing strategic policy measures that harness the long-term trends of TFP. These recommendations encompass key areas such as labor, capital, institutional frameworks, and innovation policies. Countries can optimize sustainable economic development and foster effective technological integration in an increasingly interconnected global economy by implementing these measures.