Total Factor Productivity Growth Rate Research Articles

Can Uzbekistan Economy Retain Its High Growth Rate? Scenarios of Economic Development in 2015-30

Uzbekistan in recent 10 years is an extremely successful economy – high growth (8%), low domestic and international debt, undervalued exchange rate, relatively even distribution of income, creation from scratch competitive export oriented auto industry. It is important though to avoid “dizziness from success” and to envisage possible growth traps in the future. This paper discusses two unfavourable scenarios – negative terms of trade shock due to the decline in cotton, gas and gold prices (a deterioration of the current account balance by 10 p.p. of GDP) and a decline in growth rates of total factor productivity (TFP), as well as possible government responses to these shocks, in particular, changes in industrial policy. In recent years Uzbekistan promotes heavy chemistry industries (production of synthetic fuel and polypropylene goods from natural gas). This is the next stage of industrial policy after reaching food and energy self-sufficiency and successful auto industry development. There are reservations, however, against this strategy. First, gas production is about to decline due to depletion of reserves. Second, the level and growth rates of TFP in heavy chemistry are by far not the highest (they are the highest in light and food industry and in machine building). The increased share of heavy chemistry in total industrial output will cause the decline in the level and the growth rates of TFP. Third, auto industry is already a success, it may be reasonable to continue to support machine building industries of medium level of technology sophistication, like auto industry. For the country of the average size, export specialization in two major areas (autos and heavy chemistry) may be excessive.

An equilibrium analysis of the land use structure in the Yunnan Province, China

Global land use structure is changing rapidly due to unceasing population growth and accelerated urbanization, which leads to fierce competition between the rigid demand for built-up area and the protection of cultivated land, forest, and grassland. It has been a great challenge to realize the sustainable development of land resources. Based on a computable general equilibrium model of land use change with a social accounting matrix dataset, this study implemented an equilibrium analysis of the land use structure in the Yunnan Province during the period of 2008–2020 under three scenarios, the baseline scenario, low TFP (total factor productivity) scenario, and high TFP scenario. The results indicated that under all three scenarios, area of cultivated land declined significantly along with a remarkable expansion of built-up area, while areas of forest, grassland, and unused land increased slightly. The growth rate of TFP had first negative and then positive effects on the expansion of built-up area and decline of cultivated land as it increased. Moreover, the simulated changes of both cultivated land and built-up area were the biggest under the low TFP scenario, and far exceeded the limit in the Overall Plan for Land Utilization in the Yunnan Province in 2020. The scenario-based simulation results are of important reference value for policy-makers in making land use decisions, balancing the fierce competition between the protection of cultivated land and the increasing demand for built-up area, and guaranteeing food security, ecological security, and the sustainable development of land resources.

CAPITAL MISALLOCATION AND AGGREGATE FACTOR PRODUCTIVITY

We propose a sectoral–shift theory of aggregate factor productivity for a class of multisector economies with AK technologies and a constant production possibilities frontier. Loans are partly secured by collateral and partly based on reputation. We find that both the growth rate and total factor productivity (TFP) respond to random and persistent endogenous fluctuations in the sectoral distribution of physical capital, which, in turn, responds to reversible exogenous shifts in relative sector productivities. Endogenous debt limits on secured and unsecured loans slow down capital reallocation, preventing the equalization of risk-adjusted equity yields across sectors. Economywide factor productivity and the aggregate growth rate are both negatively correlated with the dispersion of sectoral rates of return, sectoral TFP, and sectoral growth rates. We also find highly volatile limit cycles in economies with small amounts of collateral.

Is starting FDI more productive than staying at home? Manufacturing and service sectors in Japan

We highlight the difference between the service sector and the manufacturing sector in regard to the determinants for a firm to start foreign direct investment (FDI) and the resulting productivity growth. This paper analyzes two questions: (1) whether a certain level of initial productivity explains a firm's choice and (2) how the productivity of such a multinational firm changes over time after FDI. Using the longitudinal panel data on Japanese firms from 1980 to 2005, we trace firm-level decisions over decades. We find that the total factor productivity (TFP) does not explain a firm's choice for starting FDI in manufacturing, but it does in service sector. In contrast, the size and the profitability of firms motivate their FDI in the manufacturing sector, but these do not matter in the service sector. In addition, after FDI, we observe 1.3% annual growth rates of TFP in service, whereas firms in manufacturing show only 0.9% growth rates. To eliminate the selection bias, each multinational firm is paired with domestic firm(s) with similar ex-ante characteristics in the same industry.

Impacts of Financial Crisis on Regional Efficiency of Banking Industry

This paper focuses on the impact of the financial crisis on the productivity of thirty American banks. We have used CCR, BCC, and Malmquist models using data for 5 years. The models study the effects of technological improvements during the years after the financial crisis on national banks and regional banks. Total factor productivity growth rate is positive and technological efficiency is improved and has influenced more than technology to total factor productivity change over the entire sample period. The Malmquist index summary of banks’ average TFPCs shows average annual total factor productivity growth rates are 12.4%, 1.7%, and 2.1% for national banks, state banks, and Arkansas banks, respectively.

Total factor productivity of Korean manufacturing industries: Comparison of competing models with firm-level data

This paper presents the parametric estimation of the rates of technical change and total factor productivity (TFP) growth of 7462 Korean manufacturing firms over the period 1987–2007. Two alternative formulations of technical change measured by the time trend and the general index approaches are estimated with panel data models assuming flexible functional forms. Several extensions of each approach are also considered and their benefits and limitations are discussed. In addition to making estimates of the TFP growth and its decomposition, the paper compares the parametric TFP growth measure with the non-parametric Solow residual serving as a benchmark. Several hypotheses related to technology level, firm sizes, industrial sectors, skill biased technological change and macroeconomic and industrial policies are tested to explain the growth patterns and heterogeneity in technical change, input biases and TFP growth rates. Using second regression analysis, the paper explores the determinants of TFP growth and their policy implications.

Productivity of Dairy Supply Chains: A Comparative Analysis Across the Countries of the Baltic Sea Region

To explore the competitiveness of the Finnish dairy chain, we analysed its productivity performance relative to that of other Baltic countries: Sweden, Denmark, Germany, Poland, and the three Baltic states. We used partial productivity indicators and indices of total factor productivity (TFP) to investigate productivity growth and productivity levels in both dairy farming and dairy manufacturing, using data from the Farm Accountancy Data Network as well as national industrial statistics. At farm level, there are enormous differences in the level of labour productivity across the eight countries: a dairy farmer in Denmark produces 13 times more milk than one in Latvia or Lithuania. Labour productivity in Finland is also significantly lower than in the other old EU countries – not only Denmark, the clear leader, but also Germany and Sweden. Further, there is evidence that Estonia is catching up with Finland in terms of labour productivity. A decomposition analysis then shows that the cross-country differences in labour productivity on farms are driven primarily by differences in labour requirements per cow, while differences in milk yields account for a much smaller share of the difference. Thus, the key to high labour productivity in dairy is the farm structure and the adoption of mechanical innovations, while differences in adoption of biological innovations (e.g., genetic improvement, feeds) are relatively less important. In a second step, a growth accounting exercise indicates that growth in farm-level production in the four older EU members has occurred through different channels, but that TFP growth rates have been roughly comparable from 1995 to 2010. Thus, the competitive position of Finnish dairy farms relative to those in Sweden, Germany and Denmark has not changed greatly over the last two decades. More positively, we find that in recent years (i.e., since 2004), TFP on Finnish farms has grown much faster than on German and Swedish farms. Altogether, Finnish farms appear in the process of raising their productivity to the level achieved by German and Swedish farms, while Danish farms are probably out of reach. Extending the comparison to include the new EU members reveals that dairy farms in those countries are lagging behind Finnish ones in terms of productivity and are not catching up. Although Estonian farms, which are on average relatively large, have recorded impressive increases in yields and labour productivity, this has been achieved more by substitutions of other production factors for labour than real efficiency gains. The processing level of the Finnish dairy supply chain appears more competitive when benchmarked against the processing sectors of the old EU members, although TFP growth has been slow in absolute terms. However, the productivity of dairy manufacturing in Poland and Lithuania is increasing rapidly and converging towards the levels observed in the older EU countries. Overall, the evolution documented in the paper is consistent with the view that transferring technologies and organisational forms from the productivity leaders to the productivity “laggards” is easier in the manufacturing sector than in primary production, due to the typical difference in the size of firms as well as the more pronounced reliance of the primary sector on country-specific agro-ecological conditions.

Trade, Transaction Costs and TFP: Evidence from Tunisia and Egypt

Increases in total factor productivity (TFP) are commonly associated with accumulation of knowledge through technological innovation and investment in R&D. However, organizational innovations also improve productivity through the reduction of transaction costs. The main purpose of the paper is to assess the effect of trade innovations (aiming at decreasing transactions costs related to trade), labor qualification levels (or R&D) on the growth rate of TFP in Tunisian and Egyptian manufacturing industries. Empirical results show that trade innovations reduce transactions costs and lead to increases in TFP. Trade innovations and labor qualifications are more significant than investments in R&D. However, for the case of Tunisia, this growth rate is positively associated to trade innovations when the reduction of transaction costs is important enough.

Total factor productivity growth of the crop sector in Kerala

Productivity growth in agriculture is both a necessary and sufficient condition for its development. Total factor productivity (TFP) is an important measure to evaluate the performance of any production system and sustainability of a growth process. There are several reports that total factor productivity growth is declining over the years in many parts of India even with the application of increased inorganic fertilisers. The cropping system is sustainable if it can maintain total factor productivity growth over time. The TFP growth rate showed stagnation in the crop sector (negative and very low TFP growth rate Annum−1) in Kerala and a similar pattern was observed in all districts. A perspective of the TFP changes across the districts and state and the percentage share of total factor productivity in output growth of the crop sector in Kerala showed clear signs of unsustainability of the crop sector. The study revealed that all the districts (except Kollam, Idukki, Wayanad and Palakkad) and the state as a whole, the share of TFP in the output growth was negative during the time period 1980–81 to 2009–10. The period wise analysis also derived deceleration in the total factor productivity growth.

Progreso tecnológico y desempleo en Colombia: una aproximación desde los modelos de búsqueda

In Colombia, the nineties was a period characterized by significant increases in unemployment, especially since the second half of the decade. Although several reasons have been discussed in order to explain this increase, it has been given very little attention to the effect of technological progress, which showed a significant measured as the growth of Total Factor Productivity (TFP), it recorded a significant slowdown for the period 1996 - 2000. Through the quantitative application of Pissarides and Vallanti model (2007), that a negative model with economic growth and frictions in the labor market, this paper shows that negative relationship between technological progress and unemployment could only be explained by the dominance of capitalization effect, where lower rates of TFP growth would have discouraged the creation of jobs and generated an unemployment's increase. However, it was found that, even in the extreme case where all technological progress would have operated under this effect, the slowdown in TFP observed during the period 1996-2000 does not explain the increases in unemployment, indicating that other factors different to technological progress are the ones that explain which explain this phenomenon.

Extent of technological change in rice cultivation over four decades in West Bengal, India

Rice is a principal food crop which occupies nearly a one-fourth of the gross irrigated area in India. However, the present study attempts to judge the essence of the Green Revolution in rice cultivation and its actual reflection regarding the factor contribution over four decades in West Bengal, India. The study measures the extent of technological change in rice cultivation using the Divisia-Tornqvist Theil index model for computing the total factor productivity (TFP) of rice for the state of West Bengal. Subsequently, the spatial change in the TFP as well as a comparative study on productivity, input use, break-up of cost components and economic return in the paddy cultivation over different size classes across all agro-climatic zones of West Bengal has been made in order to identify the most promising zone regarding technological advancement in rice cultivation. The study reveals that technological change in rice cultivation has occurred in the state of West Bengal for the entire four decades while its extent has not been equally disseminated in decades. The effect of the productivity change was robust in the 2<sup>nd</sup> decade (1981–1982 to 1991–1992) with a 4.19% TFP growth rate indicating that the good effect of the Green Revolution has began to start regarding the technological change in rice cultivation over West Bengal. On the other hand, the TFP<sub>rice</sub> results in the state have given a dismal picture in the later phases under study where it starts declining with the change of time. At the end decade (2001–2002 to 2009–2010), the TFP growth has been found to be negative (–0.69) reflecting ill effects of a higher use of inorganic fertilizers, insecticides and pesticides to corrupt the soil fertility status of the state. It is the quality HYV seed that dominates among all factor contributors for the overall TFP<sub>rice</sub> change along with the human labour use. Farm mechanization enters after the 90s indicating a major reform in the context of the technology adoption by the rice growers in the state. The region-wise scenario of rice cultivation in the state has proved that the Gangetic Alluvial tract has been the better technology adopter with higher TFP indices as compared to the problematic regions like the Red Lateratic zone and the Coastal Saline belt, the reason of which might be the improved fertility status of soil with a large number of progressive paddy growers operating in terms of a better knowledge gaining, a better education and extension.    

Employment protection and productivity: evidence from firm-level panel data in Japan

Recent developments in the literature on Employment Protection Legislation (EPL) have revealed that changing the stringency of employment protection can lead to extensive consequences outside the labour market, by affecting firms’ production decisions or workers’ commitment levels. This article provides the first empirical evaluation of the comprehensive effect of restrictions on firing employees in Japan, by exploiting the variations in court decisions. We find that judgements lenient to workers significantly reduce firms’ total-factor productivity growth rate. The effect on capital is mixed and inconclusive, although we obtain modest evidence that an increase in firing costs induces a negative scale effect on capital inputs.

Does Freer Trade Really Lead to Productivity Growth? Evidence from Africa

Theory predicts that trade liberalization should raise average total factor productivity (TFP) among manufacturing firms. However, this is a generic prediction and depends on maintained assumptions about industries, factor markets, and trade patterns that may not fit well for developing countries. Using firm-level data from Ghana, Kenya, and Tanzania during the 1990s, a period of fairly rapid trade policy liberalization, we estimate productivity effects of trade. Our analysis confirms the well-known association between export intensity and higher productivity of the firm; however, the evidence for “learning by exporting,” or an increase in productivity associated with greater exports, is mixed, with several instances of negative average TFP growth among exporters. Our analysis indicates that such declines are likely attributable to the effects of lower external tariffs, because the firm-level productivity margin below which exporting is unprofitable moves down as the external tariff rate is reduced. We also find that sales to the rest of the world and sales to other African economies have differential effects on productivity growth rates, and that for country-specific reasons, these effects are not uniform. Controlling for initial productivity and the destination of exports (within or outside Africa) helps us understand why in some cases, export participation is associated with negative rates of TFP growth.

Federal regulation and aggregate economic growth

We introduce a new time series measure of the extent of federal regulation in the U.S. and use it to investigate the relationship between federal regulation and macroeconomic performance. We find that regulation has statistically and economically significant effects on aggregate output and the factors that produce it—total factor productivity (TFP), physical capital, and labor. Regulation has caused substantial reductions in the growth rates of both output and TFP and has had effects on the trends in capital and labor that vary over time in both sign and magnitude. Regulation also affects deviations about the trends in output and its factors of production, and the effects differ across dependent variables. Regulation changes the way output is produced by changing the mix of inputs. Changes in regulation offer a straightforward explanation for the productivity slowdown of the 1970s. Qualitatively and quantitatively, our results agree with those obtained from cross-section and panel measures of regulation using cross-country data.

Economic Reforms and Total Factor Productivity Growth of Indian Manufacturing: An Inter-State Analysis

The extent to which Indian organized manufacturing performance changed after the Economic Reform of 1991 has been an important question among empirical analysts. Using input-output data from the Annual Survey of Industries for the period 1970-71 through 2007-08, this paper compares the pre- and post-reform performances of Indian manufacturing in terms of total factor productivity growth. We use the non-parametric method of Data Envelopment Analysis to construct the Biennial Malmquist Index of total factor productivity for Indian states to determine if the states have experienced improvement in manufacturing productivity during the post-reform years. Results show that at the all-India level, total factor productivity growth rate in manufacturing is higher during the post-reform period. Although the majority of states experienced accelerated productivity growth, some states experienced declines in productivity after the reforms. However, the regional variation in the rates of productivity change diminished during the post-reform years. A non-parametric decomposition of the Malmquist productivity index into its components shows that both before and after the reforms technological progress was the most important component of the manufacturing growth process.

Comparing the Effects of CAFTA on Internal Trade of China and ASEAN Countries

This paper compares the effects of CAFTA on internal trade of China and ASEAN Countries. ASEAN countries are analyzed individually, by developing two gravity models and using the panel data of 7 samples countries and areas from 2002 to 2010. The empirical result shows that GDP, distance, exchange rate, population and policy framework of CAFTA are trade determinant factors for China and ASEAN countries. The effects of CAFTA implementation in this study can be divided in four categories. Firstly, positive and significant effect. Singapore and Malaysia are gaining this effect. Secondly, positive effect but not significant, China and Thailand are gaining this effect. Thirdly, negative but not significant. Indonesia is having negative but not significant effect. Fourthly, negative and significant. Philippines is having this effect. Negative effect is happened to Indonesia and Philippines, not significant for Indonesia, but significant for Philippines. These two countries are getting less compare to other ASEAN countries. The rank of ASEAN countries that receive the greatest effect of CAFTA to the smallest one, that is: Singapore, Malaysia, Thailand, Indonesia and the last Philippines and this result is similar with the rank of countries Total Factor Productivity (TFP) growth rate.

Productivity and openness: firm level evidence in Brazilian manufacturing industries

This study investigates the productivity of Brazilian manufacturing industries, particularly addressing the influence of liberalization on productivity. We first calculate total factor productivity (TFP) by estimating the stochastic frontier production function and the inefficiency determination equation simultaneously. Then TFP growth rates are regressed on openness-related variables and other firm characteristics. The results show that firm openness to the world is a crucial determinant of their productivity. Data used for this study were obtained from the Investment Climate Survey, provided by the World Bank.

Capital utilization in Japan's lost decade: A neoclassical interpretation

This paper attempts to reconcile the controversy regarding Japan's total factor productivity during its slump in the 1990s by clarifying the role of capital utilization. Hayashi and Prescott (2002) emphasized that the decline in the exogenous total factor productivity growth rate was the main cause. However, some empirical studies have also pointed out that the fall in capital utilization rates accounted for a large part of the decline in the total factor productivity growth rate. In this study we incorporate variable capital utilization into a neoclassical growth model, calculate total factor productivity taking into account capital utilization, and simulate the aggregate output and capital-output ratio. We found that although our total factor productivity growth rate in the 1990s is consistent with empirical studies, our simulation can explain the observed data. This result indicates the importance of capital utilization rates as a source of propagation during Japan's depression.

Stochastic Frontier Approach and Data Envelopment Analysis to Total Factor Productivity and Efficiency Measurement of Bangladeshi Rice

The objective of this paper is to apply the Translog Stochastic Frontier production model (SFA) and Data Envelopment Analysis (DEA) to estimate efficiencies over time and the Total Factor Productivity (TFP) growth rate for Bangladeshi rice crops (Aus, Aman and Boro) throughout the most recent data available comprising the period 1989–2008. Results indicate that technical efficiency was observed as higher for Boro among the three types of rice, but the overall technical efficiency of rice production was found around 50%. Although positive changes exist in TFP for the sample analyzed, the average growth rate of TFP for rice production was estimated at almost the same levels for both Translog SFA with half normal distribution and DEA. Estimated TFP from SFA is forecasted with ARIMA (2, 0, 0) model. ARIMA (1, 0, 0) model is used to forecast TFP of Aman from DEA estimation.

Analysis on DEA-Malmquist efficiency index of medical facilities in Zhejiang province

Objective To measure the changes of total factor productivity (TFP)of Zhejiang medical facilities for decision makers to promote their service efficiency.Methods Collecting the panel data of 2005-2010(four input indexes and five output indexes)from medical facilities in Zhejiang province and measuring with Malmquist index of DEA programs of DEAP2.1.Results The average annual TFP growth rate in the period is 2.0％.A further decomposition found that the average annual growth rate of technology progress is 1.8 ％,while that of technical efficiency and pure technical efficiency is only 0.2％respectively.In the meantime,no scale efficiency growth was found.Conclusion The average annual growth of total factor productivity of Zhejiang medical institutions is substantially low in the period,with technology recession found as well.To maximize productivity of the medical sector,the allocation and internal management should be strengthened to stimulate technical efficiency and scale efficiency while encouraging technology innovation. Key words: Total factor productivity; Malmquist index; Data envelopment analysis; Medical facility