Decomposing Total Factor Productivity Growth in Manufacturing and Services | Zendy

Neil FosterMcGregor | Zendy; Bart Verspagen | Zendy

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Decomposing Total Factor Productivity Growth in Manufacturing and Services

Author(s) -

Neil FosterMcGregor,

Bart Verspagen

Publication year - 2017

Publication title -

asian development review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.487

H-Index - 23

eISSN - 1996-7241

pISSN - 0116-1105

DOI - 10.1162/adev_a_00082

Subject(s) - total factor productivity , economics , gross output , productivity , multifactor productivity , manufacturing , sample (material) , econometrics , international trade , macroeconomics , business , production (economics) , chemistry , chromatography , marketing

Using the World Input–Output Database, this paper calculates total factor productivity (TFP) growth for a sample of 40 economies during the period 1995–2009 to show that TFP growth in Asian economies has been relatively strong. In a number of Asian economies, TFP growth in services has outpaced that in manufacturing. This paper presents a novel structural decomposition of TFP growth and shows that the main drivers of aggregate productivity growth, as well as differences in productivity growth between services and manufacturing, have been changing factor requirements. These effects tend to offset the negative productivity effect of a declining ratio of value added to gross output.

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