Abstract
Although Micro, Small, and Medium Enterprises (MSMEs) engaged in the agricultural, livestock, forestry, and fishery sector was recorded as the second-largest contributor to the Indonesian economy in the last decade, but their productivity level was relatively low due to their small-scale business entity. To further enhance their contribution to the national economy, MSMEs needs to enhance their productivity. This study measures Total Factor Productivity (TFP) of the MSMEs in the fisheries sector across 23 districts/cities in Aceh province, Indonesia over the period from 2015 to 2019 period. The study also decomposes the TFP into its sources. Using Data Envelopment Analysis (DEA), the study documented a low level of MSMEs' TFP during the study period. The MSMEs experienced different levels of TFP. Overall, the MSMEs experienced a decline in their TFP level, contributed mainly by the deteriorations in the efficiency and technical efficiency levels. These findings indicated the urgent call for adopting advanced fisheries-related technologies and implementing good MSMEs' governance practices to further promote MSMEs' performance. Finally, the relevant government authorities are suggested to prioritize promoting less productive MSMEs in the province by providing adequate financial assistance and conducting regular professional entrepreneurial workshops, short courses, and training programs.
Highlights
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the Indonesian economy
Intended to fill the gaps in the previous researches, this study aims to measure the Total Factor Productivity (TFP) of MSMEs in the fisheries sector and identifies its TFP’s sources using the Data Envelopment Analysis (DEA)
Of 2,178 units of MSMEs in the fisheries sector in 23 districts/cities in Aceh province, Indonesia, 138 of them were selected as the sample of study using a stratified random sampling technique
Summary
Small, and Medium Enterprises (MSMEs) play a crucial role in the Indonesian economy. The contribution of MSMEs to the national economy has been increasing over the last decades. Apart from offering new job opportunities, MSMEs contribute to income disparity reduction and poverty alleviation. Ministry of Cooperatives and SMEs reported that the existing 61.7 million units of MSMEs in 2016 have contributed 89.2% job opportunities to the labor market, 60.34% to the total national economy, 14.17% to the total exports, and 58.18% to the total investment [1]. The MSMEs’ contributions to the Indonesian economy showed a growing trend. In 2020, the existing 64.2 million units of MSMEs contributed 61.07% to the national economy, 97% to the labor market, and 60.4% to the total national investment [2]
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