Sector trends of total factor productivity: where is the growth potential?

This study investigates the Jordanian agricultural sector's labor productivity, technical efficiency, and total factor productivity from 1990 to 2023. It studies the interaction between agricultural output and the factors of production, including labor, capital, and land, while emphasizing the role of economic policy in maximizing output per unit of input. In terms of methodology, the study applied econometric models, including the growth accounting methodology and the vector error correction model (VECM) to analyze the long-run relationship and the data envelopment analysis (DEA) to measure technical efficiency. The results showed that labor productivity and total factor productivity (TFP) in the Jordanian agricultural sector went through three phases. The first was a noticeable decline in the 1990s, followed by an improvement during the period 2000–2011, and then a renewed slowdown after 2011, which was attributed to several factors, including a decline in agricultural investments, restrictions on foreign labor, and rising production costs. The VECM model results indicated a long-term relationship between agricultural output and each of capital, labor, and cultivated land, with labor showing greater importance than the other factors. On the other hand, the results of the DEA showed an improvement in technical efficiency up to 2011, followed by a decline due to the underutilization of economies of scale and weak resource use. The study recommends focusing on policies that support investment in agricultural technologies; It also recommends promoting local labor training and developing agricultural infrastructure to improve efficiency and achieve sustainable productivity growth.

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This article explores educational mismatch for twenty-three different Turkish industrial sectors using all available household surveys from 2004 to 2015.Our aim is to first evaluate the educational mismatch level in the Turkish industrial sectors and then analyze its effects on the sectoral total factor productivity, labor productivity, and wages.For the sectoral total factor productivity, our dynamic panel data estimations suggest that the modal value of education increases the growth rate of total factor productivity.Therefore, the widespread existence of educational mismatch implies the efficiency loss in Turkish manufacturing sector for the period of 2004-2015.For the sectoral labor productivity, the modal value of education and the mean value of over-education increases labor productivity whereas the mean value of undereducation decreases it.These results clearly imply that the human capital theory overcomes the job satisfaction theory for the Turkish industrial industry because the mean years of overeducation increases the sectoral labor productivity.For the sectoral wages, the mean value of over-education raises wages.

The first in a two-part series on Japanese total factor productivity, this paper presents an analytical argument for a non-monetary structural reform policy pillar based on the assumption that overcoming deflation, while arguably a necessary precursor to reform, is not in its own right a solution to Japan’s structural ailments. Our analytical evidence takes the form of comparative calibrated simulations of aggregate Japanese growth accounting using the neoclassical growth model, first with and secondly without accounting for Investment Specific Technology (IST). We find that the IST-adjusted model better explains Japanese growth accounting during the “lost decades” than the base-case model. The implications of this outcome are as follows: IST represents a type of relative deflation – the decline in capital goods prices in terms of consumption units. Structurally, this contributes positively to total factor productivity. We supplement this with counterfactual analysis: were deflation the primary causal trigger for Japan’s structural decline, sector decomposition of growth accounting should show leading price declines in the worst performing sectors in terms of TFP. This is not the case. When we decompose Japanese growth accounting by sector, we find that the sectors responsible for the slowest TFP growth and those furthest from the “balanced growth path” characterized by theory neither showed the first, deepest, nor most consistent negative growth in deflators. Rather, the most deflationary sectors were out-performers in terms of TFP and those that demonstrated characteristics of a “balanced growth path,” tending to belong to manufacturing (rather than nonmanufacturing) and IT (rather than non-IT) industries.

Sources of transport sector labor productivity performance in industrialized countries: Insights from a decomposition analysis

It is evident that higher temperature causes discomfort, fatigue, and cognitive impairment in workers and it also a?ects machines? performance and thus potentially decrease labor and capital productivity. However, little attention has been paid to the effects of climate change on productivity at the macro level. Given the importance of total factor productivity for long-run economic growth, this study examines the impact of climate change on total factor productivity by using the panel data from 1990-2016 of developing countries. In doing so, at first, the present study calculates the total factor productivity by using the Cobb-Douglas production function. In the second step, the study estimates the impact of climate change on total factor productivity along with other covariates such as trade openness, education, and information and communications technology. To get the precise results, this study used panel data econometric techniques such as common, random and fixed effects. Among common, random and fixed effects models; the fixed effect model is chosen as a best candidate model through appropriate model selection criteria. The results indicate that growing temperature decreases the total factor productivity while education, trade openness and information and communications technology increase total factor productivity. This study suggests that there is a need to take adaptations to overcome the problem of climatic changes on total factor productivity in the short run along with mitigation to get the sustainable economic growth in the long run.

Comment

Continuous cotton ( Gossypium hirsutum L.) production was examined using data from Alabama's long‐term Old Rotation experiment (c. 1896). Index values were used to examine trends in productivity and sustainability for 95 yr. Treatments studied were those receiving (i) no N fertilizers and no winter legumes for 95 yr, (ii) only winter legumes as a source of N, and (iii) chemical fertilizer N. Three sets of index numbers were calculated from all inputs and outputs involved in the production systems: (i) total factor productivity (TFP), which accounts for all direct production inputs, but which does not consider production externalities; (ii) productivity relative to a base plot;and (iii) total social factor productivity (TSFP), which accounts for all direct production inputs as well as externalities of soil erosion and pesticide use. Viewed from the 95‐yr perspective of the Old Rotation experiment, all three treatments fulfill at least one criterion required for a system to be considered sustainable. Output per unit of input is higher in 1991 than in 1896, even when externalities are valued. None of the systems showed a linear trend in output or TFP over the life of the experiment;productivity cycles are present in all three systems, despite a positive overall trend. An average annual rate of TSFP growth of 1.8%/yr was attained. Accounting for erosion and pesticide externalities reduced the annual productivity growth rate by 0.2%/yr. The system that has neither an organic nor a chemical source of added N was less productive and less sustainable than the two other systems, with a 0.3%/yr TSFP growth rate. The plots using organic and chemical sources of N had similar productivity impacts. Valuing soil erosion and pesticide externalities had only a modest effect on measured productivity. The most dramatic single event to affect the productivity of cotton farming was the introduction of the mechanical cotton picker. The impact of this technology was powerful enough to offset the effect of many other changes in the system. Research Question Is cotton production in the southeastern USA sustainable? How do we measure sustainability of a crop that has been produced for almost 200 yr in the same region but has a reputation for depleting the soil of nutrients, extensive soil erosion, and high pesticide use? The objective of this study was to use input and output indexes and a calculation of total factor productivity (TFP) to determine if cotton production using different management strategies is sustainable over nearly a century of continuous production. Literature Summary Most researchers agree that a sustainable system should maintain or enhance agricultural production, reduce the level of production risk for the farmer, protect natural resources, be economically viable, and be socially acceptable. Measuring all of these attributes of a production system is very difficult. However, using the extensive data available from historical, long‐term experiments should provide insight as to sustainability of certain production systems. Alabama's Old Rotation (c. 1896) is the oldest continuous cotton experiment in the world. Input and output (yield) records and estimates allow calculation of TFP indexes over the 95‐yr history of continuous cotton production. Different cotton production systems can be compared. Study Description Three continuous cotton systems from the Old Rotation were chosen for comparison: (i) No N and no winter legumes since 1896 (No N), (ii) winter legumes (crimson clover and/or vetch) as the only source of N since 1896 (winter legumes), and (iii) no winter cover crop and 120 lb N/acre as ammonium nitrate since 1956 (N fertilizer). Where input records were not recorded (e.g., labor, costs, machinery, etc.), they were estimated from USDA, Alabama Agricultural Experiment Station, and Alabama Cooperative Extension Service publications. Soil erosion estimates for the three cropping systems on a Pacolet fine sandy loam, were made using Erosion Productivity Index Calculator modeling. Input, output, TFP, and total social factor productivity (TSFP) indexes for 95 yr were calculated. Total social factor productivity includes estimated values for the negative offsite effects of soil erosion and pesticide use. Applied Questions Is continuous cotton production sustainable? Viewed from the 95‐yr perspective of the Old Rotation, the no N, winter legume, and N‐fertilized continuous cotton plots all fulfill at least one criterion required for a system to be sustainable. Output per unit of input is higher in 1991 than in 1896, even when externalities (erosion and pesticides) are valued. The average growth rates on the No N plot are 0.5%/yr for TFP and 0.3%/yr for TSFP. On the winter legume plot, TFP and TSFP grew at a rate of 2.0%/yr and 1.8%/yr, respectively. The plots using organic and chemical sources of N had similar productivity records. None of the systems shows a linear trend in TFP over the history of the experiment. Productivity cycles are present in all three systems, despite the positive overall trend. An important focus of future research will be to explain whether these cycles are related to weather, technology, or changes in the resource base. As one would expect, the system that has neither an organic or a chemical source of added N is less productive than the two other systems. This system compares even more poorly when externality costs are assigned. Organic and chemical sources of N have similar productivity impacts. How have externalities such as soil erosion and the negative impact of pesticide use on the environment affected TFP? Soil erosion and pesticide externalities have had only a modest effect on measured productivity. The no N plot indexes are not changed at all; TFP on the legume and N‐fertilized plots decreased by 4 and 6%, respectively. The main conclusions of the previous question are therefore unaffected. How have technological advancements affected long‐term productivity/sustainability of continuous cotton production? The most dramatic single event to affect productivity was the introduction of the mechanical cotton picker around 1960. The impact of this technology is powerful enough to offset the effect of many other changes in the system. This advancement allowed cotton production to move from a labor‐intensive environment with increasing labor costs per pound of yield to an environment where harvesting costs were not seriously affected by increasing yields. Because technological advancements cannot be predicted into the future, predicting the long‐term sustainability of a system becomes very difficult.

PurposeThe main aim of this paper is to examine labour productivity trends in Italy over the period 1981‐2004.Design/methodology/approachTo this end, relying on recent developments in the analysis of non‐stationary dependent panels, the paper develops a new method for estimating total factor productivity (TFP) trends.FindingsThe conclusions confirm the view that the recent decline in Italian labour productivity growth is mostly due to a widespread fall in TFP growth.Research limitations/implicationsThe main assumption underlying the proposed TFP estimation method is that technology growth is driven by a single trend common to all units included in the panel (industries, regions or countries).Originality/valueThe paper provides two distinct contributions: empirically, it provides robust evidence that TFP slow‐down is the main cause of recent negative trends in labour productivity in Italy. Methodologically, the paper proposes an approach to estimating TFP that enjoys several advantages: only basic data for input and output flows are needed, the non‐stationary nature of the data is explicitly taken into account, and confidence intervals for TFP growth can be computed. This method can thus be easily applied to many routinely available datasets, to either corroborate existing growth accounting estimates or to obtain previously unavailable estimates.

Comment on “China's Recent Economic Performance and Future Prospects”

Science, Technology, and Competitiveness in Alberta's Agriculture and Food Sector

This paper introduces a novel methodology for estimating carbon total factor productivity based on the Cobb-Douglas production function. The research method introduced in this article expands upon the framework for assessing total factor productivity through the Solow residual method. It unifies the conceptual and methodological aspects of carbon total factor productivity with those of single factor productivity. Utilizing panel data from various provinces between 2010 and 2021, we computed carbon total factor productivity to understand its implications for China in combating global climate change. We demonstrate that (i) we have introduced a method to handle negative coefficients in the Cobb-Douglas production function by incorporating productivity in lieu of input factors during calculations. (ii) Carbon total factor productivity, encapsulating the geometric weighted mean of labor, capital, and carbon productivity, holds notable economic relevance. Further, it serves as an integrative metric comprising carbon productivity intertwined with the mean labor and capital carbon factors. And (iii) the influence of carbon total factor productivity growth on economic progression remains relatively subdued, with escalating labor force growth posing detrimental effects on several provincial economies. Enhancing carbon total factor productivity emerges as an imperative to harmonize robust economic growth with strategic carbon curtailment. Our analytical framework provides nuanced perspectives on productivity determinants, accentuating the thrust towards sustainable evolution amidst climatic challenges. This investigation bears profound significance for policymakers endeavoring to sculpt a carbon-conscious economic paradigm in consonance with global climatic ambitions.

Using data from the Nepalese manufacturing sector, this article examines whether the policy reforms improve efficiency (productivity) and benefit the poor in least developed countries (LDCs) with weak institutions and poor physical infrastruc ture. Results indicate some improvements in all indicators of productivity following policy reforms, but the Nepalese manufacturing sector remains fragile due to rigidity in the factor market. Our analysis suggests that despite an increase in labour productivity, increased proportion of manufacturing value added has not been passed on to workers, indicating that the poor have not benefited much from the reform process. Total Factor Productivity (TFP) continued to decline even after the reforms, but at a lower rate. There is an urgent need to introduce further reforms in the labour market and the infrastructure sector. The econometric evidence suggests higher productivity growth in those industries which are able to produce on a large scale, have higher protection and semi-skilled workforce, but lower capital intensity and no public sector domination.

Labour productivity is concerned with the total number of hours worked in a unit time to produce goods and services. It has become imperative for organisations to retain a competitive edge in the market. Labour productivity contributes to an organisation’s total factor productivity, which ultimately leads towards growth in national income. Thus, the economic development of nations lies in the efficient use of labour. Recent studies have shown that human emotions, aspirations and feelings considerably influence productivity. Religion, as a domain of human beliefs and feelings, also affects labour productivity because people carry their work-related religious beliefs into the workplace. Islam stands for commitment, hard work, and sincerity in all spheres of life. It presents the concept of Ihsān, which motivates the highest form of excellence in performing all duties. The concept of Ihsān carries some essential attributes that positively impact work-related values. This study presents the concept of Ihsān in the context of the working environment in organisations, and its potential impact on labour productivity. In this study, a qualitative approach, based on an extensive review of the literature, has been taken to understand the concept of Ihsān and to determine its relationship with the labour productivity. The findings explicitly show that attributes of Islamic concept of Ihsān positively affect labour productivity This discussion leads to some policy recommendations for organisations to create Ihsān-friendly working environments to improve productivity and for efficient use of labour resources.

We calculate partial factor productivity and total factor productivity (TFP) indices for rice production using panel data across 42 Japanese prefectures from 1996 to 2006, and perform panel unit root tests of TFP convergence across prefectures. We find that during this period, the partial factor productivity growth rates for capital, land and materials stagnated at the aggregate national level, as did the TFP growth rate, despite a large increase in labor productivity. We also identify evidence of a convergence in TFP across Japanese prefectures.