The anatomy of growth in the OECD since 1870

Conventional growth accounting exercises are extended in this paper to allow for endogeneity of capital, demographic transitions, age dependency, and employment rates, among other factors. Using data for the OECD countries in the period 1870–2006 it is shown that growth has been predominantly driven by demographics and TFP growth. TFP has, in turn, been driven by R&D, knowledge spillovers through the channel of imports, educational attainment, and the interaction between educational attainment and the distance to the technology frontier. The estimates suggest permanent growth effects of R&D and human capital.