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A decomposition analysis of total factor productivity growth in MENA countries: stochastic frontier analysis approach

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  • Mushtaq Ahmad Malik
  • Tariq Masood

Abstract

The present study aims to examine the output and total factor productivity (TFP) growth by estimating a stochastic frontier production function for a panel of Middle East and North Africa (MENA) countries, and to decompose TFP growth into technical change, technical efficiency, and scale efficiency. The empirical findings reveal that, while factor accumulation is the main driver of output growth in the MENA region, TFP growth is increasingly accounting for a respectable proportion of output growth, with improved technical efficiency playing a crucial role in productivity growth. Specifically, the average annual TFP growth is found to be 0.846%, with positive contributions from technical efficiency and scale efficiency. However, the results show that technical progress has had a negative impact on TFP growth. The positive growth in technical efficiency suggests that the countries are catching up towards the optimal production frontier. At a disaggregated level, oil-rich countries registered negative effects of technical progress, while non-oil countries registered negative effects of scale efficiency. Technical efficiency, however, accounts for the largest positive factor in TFP growth in both oil and non-oil country groups.

Suggested Citation

  • Mushtaq Ahmad Malik & Tariq Masood, 2021. "A decomposition analysis of total factor productivity growth in MENA countries: stochastic frontier analysis approach," Middle East Development Journal, Taylor & Francis Journals, vol. 13(2), pages 347-366, July.
    • Handle: RePEc:taf:rmdjxx:v:13:y:2021:i:2:p:347-366
    DOI: 10.1080/17938120.2021.1987147
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    Cited by:

    1. Kexin Li & Jianxu Liu & Yuting Xue & Sanzidur Rahman & Songsak Sriboonchitta, 2022. "Consequences of Ignoring Dependent Error Components and Heterogeneity in a Stochastic Frontier Model: An Application to Rice Producers in Northern Thailand," Agriculture, MDPI, vol. 12(8), pages 1-17, July.
    2. Georges Harb & Charbel Bassil, 2023. "TFP in the Manufacturing Sector: Long-Term Dynamics, Country and Regional Comparative Analysis," Economies, MDPI, vol. 11(2), pages 1-22, January.

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