Abstract
This study analyses Sri Lanka’s Total Factor Productivity (TFP) change during conflict and post-conflict periods to assess whether there has been any improvement during the post-conflict period using Solow’s Residual Method (SRM)) and an index number approach (Hicks-Moorsteen Total Factor Productivity Index - HMTFPI). Findings of both approaches reveal that the TFP growth during the conflict period was higher than that of the post-conflict period. Based on the decomposition of HMTFPI into Technological Change (TC) and Efficiency Change (EC) indices, it was revealed that the main source of TFP change throughout the sample period is TC. EC had been negative throughout the sample period.
Highlights
Productivity growth is an important aspect of economic and social development of a country
The objective of this study is to analyse whether there has been any improvement in Total Factor Productivity (TFP) growth during the post-conflict period, compared to the conflict period in Sri Lanka and what sources of productivity were prominent during the conflict and post-conflict periods
The second hypothesis was formulated with the aim of understanding what sources of productivity were prominent during the conflict and post-conflict periods
Summary
Productivity growth is an important aspect of economic and social development of a country. Productivity is a measure of performance commonly defined as the ratio of outputs to inputs (measured in terms of volumes). Total Factor Productivity (TFP) is referred to as the productivity measure involving all factors of production (Coelli et al, 2005). An index number approach (Hicks-Moorsteen Total Factor Productivity Index) is used. These methods are the applicable tools in analysing productivity trends in an overall economy, in the absence of price data on factors of production (Coelli et al, 2005). We provide a review of the theoretical framework of productivity analyses, a review of literature on productivity during conflict periods and productivity trends in Sri Lanka.
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