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Sources of Total Factor Productivity in South Asia

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  • Sanjoy Kumar Saha

Abstract

Using World Development data for the period of 1991–2020, this article examines the total factor productivity (TFP) measured by Malmquist productivity index (MPI) and its components’ technological progress and technical efficiency change (TEC) for five South Asian countries, namely India, Pakistan, Nepal, Bangladesh and Sri Lanka. TFP growth is calculated using the MPI along with panel data of those countries. This article adds onto the existing literature by estimating the technological progress and TEC for these five South Asian countries. Further, the article also emphasises differences in the TFP growth among these countries. The study finds that TFP of all the South Asian countries are cyclical in nature, highly volatile and full of ups and downs during the whole study period. TFP is growing in standard technology-based economy (India), which is the consequence of technological progress. On the other hand, among labour-intensive economies, Sri Lanka is performing better as TFP in Sri Lanka is improving at a good rate, while Pakistan’s TFP is also growing steadily. Here, both the countries’ TFP growth is driven by positive technological change. Bangladesh is observing TFP decline as Bangladesh is the worst performer among five nations in South Asia despite the fact that technological change is still progressing. Nepal’s TFP is improving as well, but at a slower pace. Except Bangladesh, efficiency change shows progressive trend in the remaining countries. JEL Classification: D24, F02, F62, O14

Suggested Citation

  • Sanjoy Kumar Saha, 2021. "Sources of Total Factor Productivity in South Asia," Review of Market Integration, India Development Foundation, vol. 13(2-3), pages 154-176, December.
    • Handle: RePEc:sae:revmar:v:13:y:2021:i:2-3:p:154-176
    DOI: 10.1177/09749292221093103
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    More about this item

    Keywords

    Total factor productivity; Malmquist productivity index; technological change; efficiency change;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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