The Impact of Knowledge-Based Economy on Labor Productivity in Developing Countries

The increase of production capacity through the increase of factor productivity always has been the big concern of economists. Knowledge is one of effective factors in productivity. The purpose of this paper is to investigate the impact of knowledge on labor productivity in developing countries during 1980-2004. To analyze the data, an unbalanced panel data approach was used. The results show that during the period under consideration, the pillars of innovation system, information infrastructures and economic and institutional regime had positive and significant impact on labor productivity in developing countries. The pillar of education and human resources has positive effect and insignificant on labor productivity in developing countries. Also due to the technical gap in developing countries and developed and low absorption capacity in developing countries, the impact of changing in the capital-labor ration on productivity is in significant.