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Productivity Growth and Efficiency Change in Malaysian Manufacturing: Recent Evidence from Disaggregated Data

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Author Info
I.K.M. Mokhtarul Wadud () (Deakin University)

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Abstract

This paper estimates productivity growth in Malaysian manufacturing over the period 1983-1999. Malmquist productivity Indices (MPIs) have been computed using non parametric Data Envelopment Analysis (DEA) type linear programming, which show productivity growth sourced from efficiency change and growth in technology. Unlike previous studies, this study identifies the sources of productivity growth in Malaysian manufacturing industries at the five digit breakdown of Malaysian Standard Industrial Classification (MSIC) thereby revealing more industry specific efficiency and technical growth patterns. Results indicated that a high majority of the industries operated with low levels of technical efficiency with little or no improvement over time. Growth estimates revealed that two third of the industries (76 out of total 114 categories) experienced average annual productivity improvement ranging from 0.1% to 7.8%. Average annual technical progress was recorded by 95 industry categories while technical efficiency improvement was achieved by 53 industries. Overall yearly average indicated relatively low productivity growth from the mid 1990’s onwards caused by either efficiency decline or technical regress. Summary results for industries showed that some of the high rates of productivity growth have been recorded in glass and glass products (7.3%), Petroleum and coal (7.2%), industrial chemicals (4.9%) contributed from both efficiency improvement and technical progress ranging from 0.8% to 5.4% and from 1.7% to 4.1%, respectively. These results are expected to have some implications for ongoing and future strategic policy reform in Malaysian manufacturing generating a more sustainable growth for specific industry categories.

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Publisher Info
Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2007_12.

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Length: 25 pages
Date of creation: 22 Oct 2007
Date of revision:
Handle: RePEc:dkn:econwp:eco_2007_12

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Related research
Keywords: Manufacturing; Productivity growth; Technical efficiency change;

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
D20 - Microeconomics - - Production and Organizations - - - General
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

References listed on IDEAS
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  1. Diewert, W E, 1992. "The Measurement of Productivity," Bulletin of Economic Research, Blackwell Publishing, vol. 44(3), pages 163-98, July.
    Other versions:
  2. Rolf Färe & Shawna Grosskopf & Dimitri Margaritis, 2001. "Productivity Trends in Australian and New Zealand Manufacturing," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(2), pages 125-134. [Downloadable!] (restricted)
  3. Mahadevan, R., 2001. "Assessing the output and productivity growth of Malaysia's manufacturing sector," Journal of Asian Economics, Elsevier, vol. 12(4), pages 587-597. [Downloadable!] (restricted)
  4. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
  5. Nadiri, M Ishaq, 1972. "International Studies of Factor Inputs and Total Factor Productivity: A Brief Survey," Review of Income and Wealth, Blackwell Publishing, vol. 18(2), pages 129-54, June.
  6. Philip Lowe, 1995. "Labour-Productivity Growth and Relative Wages: 1978-1994," RBA Annual Conference Volume, in: Palle Andersen & Jacqueline Dwyer & David Gruen (ed.), Productivity and Growth Reserve Bank of Australia. [Downloadable!]
  7. Granderson, Gerald, 1997. "Parametric Analysis of Cost Inefficiency and the Decomposition of Productivity Growth for Regulated Firms," Applied Economics, Taylor and Francis Journals, vol. 29(3), pages 339-48, March. [Downloadable!] (restricted)
  8. Nadiri, M Ishaq, 1970. "Some Approaches to the Theory and Measurement of Total Factor Productivity: A Survey," Journal of Economic Literature, American Economic Association, vol. 8(4), pages 1137-77, December. [Downloadable!] (restricted)
  9. Charles Bean, 2000. "The Australian Economic 'Miracle': A View from the North," RBA Annual Conference Volume, in: David Gruen & Sona Shrestha (ed.), The Australian Economy in the 1990s Reserve Bank of Australia. [Downloadable!]
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