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Factor Determinants of Total Factor Productivity Growth in Malaysian Manufacturing Industries: a decomposition analysis
Author(s) -
Kim Sangho,
Shafi’i Mazlina
Publication year - 2009
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/j.1467-8411.2009.01222.x
Subject(s) - allocative efficiency , total factor productivity , technical change , productivity , economics , technical progress , stochastic frontier analysis , production–possibility frontier , quality (philosophy) , economies of scale , industrial organization , scale (ratio) , manufacturing , business , production (economics) , microeconomics , macroeconomics , marketing , philosophy , physics , epistemology , quantum mechanics
To decompose total factor productivity growth into technical progress, technical efficiency change, allocative efficiency change, and scale efficiency change, a stochastic frontier approach was applied to Malaysian manufacturing data covering the period 2000 to 2004. The results show that total factor productivity was driven mainly by technical progress but was hurt by deteriorating technical efficiency. Scale efficiency and allocative efficiency also exerted significant influences on total factor productivity. The skill and quality of workers were the most important determinants of technical efficiency, whereas foreign ownership, imports, and employee quality underpinned technical progress. The impact of firm size on scale economies differed across industries.