Total Factor Productivity and Economic Growth in Indonesia

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Total Factor Productivity and Economic Growth in Indonesia

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Pierre van der Eng ()

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Pierre van der Eng

Abstract

This paper revisits the discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s economic growth during 1970-2007. It re-estimates the contribution of TFP to economic growth during this period on the basis of new estimates of GDP, capital stock, education-adjusted employment, and factor income shares. After accounting for the growth of capital stock and education-adjusted employment, the residual TFP growth was on average -0.2% per year during 1971- 2007. Capital stock growth and education-augmented employment growth explained 70% and 34%, respectively, and TFP growth -4%. Only during 2000-07 was TFP growth 1.7% per year, explaining 33% of GDP growth. The paper doubts that these results imply that the Indonesian economy did not experience the impact of technological change, as much of it may be embodied in the capital stock estimates.

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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 2009-01.

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Length: 45 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:pas:papers:2009-01

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Find related papers by JEL classification:
N15 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - Asia including Middle East
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-01-31 (All new papers)
NEP-EFF-2009-01-31 (Efficiency & Productivity)
NEP-FDG-2009-01-31 (Financial Development & Growth)
NEP-HRM-2009-01-31 (Human Capital & Human Resource Management)
NEP-SEA-2009-01-31 (South East Asia)

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This page was last updated on 2009-11-11.

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