Measurements of TFP indicate that the East Asian success story is based on
A)a significantly different economic model from the one followed in the West.
B)unusually large amounts of innovation.
C)rapid increases in the education of the work force.
D)high amounts of savings and investment.
E)large current account surpluses.

Question

Quizplus · Accepted Answer

TFP (Total Factor Productivity) measures the efficiency with which inputs (capital and labor) are combined to produce output. The success story of East Asia is based on high levels of savings and investment, which have enhanced the productivity of both capital and labor, leading to high TFP levels.

Measurements of TFP Indicate That the East Asian Success Story