Editing Growth accounting (section)

== History ==

This methodology was introduced by [[Robert Solow]] and [[Trevor Swan]] in 1957.<ref>{{cite journal |first=Robert |last=Solow |title=Technical change and the aggregate production function |journal=[[Review of Economics and Statistics]] |volume=39 |issue=3 |year=1957 |pages=312–320 |doi=10.2307/1926047 |jstor=1926047 }}</ref><ref>{{cite journal |first=Barbara |last=Spencer |title=Trevor Swan And The Neoclassical Growth Model |journal=[[History of Political Economy]] |volume=42|year=2008}}</ref> Growth accounting was proposed for management accounting in the 1980s.<ref>{{cite journal | title=Productivity Measurement and the Bottom Line | last=Loggerenberg van | first=B. | author2=Cucchiaro, S. | journal=National Productivity Review | year=1982 | volume=1 | issue=1 | pages=87–99 | doi=10.1002/npr.4040010111}}</ref><ref>{{cite journal | title=The Productivity Management Process | publisher=American Productivity Center | last=Bechler | first=J.G | year=1984}}</ref>  but they did not gain on as management tools. The reason is clear. The production functions are understood and formulated differently in growth accounting and management accounting. In growth accounting the production function is formulated as a function OUTPUT=F (INPUT), which formulation leads to maximize the average productivity ratio OUTPUT/INPUT. Average productivity has never been accepted in management accounting (in business) as a performance criterion or an objective to be maximized because it would mean the end of the profitable business. Instead the production function is formulated as a function INCOME=F(OUTPUT-INPUT) which is to be maximized. The name of the game is to maximize income, not to maximize productivity or production.<ref name="Kohli">{{cite conference | url=https://www.business.unsw.edu.au/research-site/centreforappliedeconomicresearch-site/Documents/U.%20Kohli%20-%20Productivity%20National%20vs%20Domestic.pdf | title=Productivity: National vs. Domestic | publisher=EMG Workshop, University of New South Wales, November 21–23, 2012 | last=Kohli | first=U | year=2012 | location=Sydney, Australia}}</ref>{{rp|6}}