Solow residual

The Solow residual is a number describing empirical productivity growth in an economy from year to year and decade to decade. Robert Solow defined rising productivity as rising output with constant capital and labor input. It is a "residual" because it is the part of growth that cannot be explained through capital accumulation or increased labor. Note that increased physical throughput – i.e. environmental resources – are specifically excluded from the calculation, thus some portion of the residual can be ascribed to increased physical throughput. The Solow Residual is procyclical and is sometimes called the rate of growth of total factor productivity.