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Technical efficiency, technological change and total factor productivity growth in Malaysian manufacturing sector

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  • Jajri, Idris
  • Ismail, Rahmah

Abstract

The manufacturing sector is becoming more important for the Malaysia economy. The contribution of output and employment from this sector is continuously increasing since the 1980 an, except for certain period when an economy experiences recession. Viewing from its capacity to spearhead economic growth the government has given emphasis to the manufacturing sector in achieving industrialized nation by year 2020. It is a claim that productivity for this sector had not yet achieved optima level and in certain years, the growth of productivity was smaller than the growth of wages. Even though the concept of productivity usually referred to labour productivity, this concept is very much related to total factor productivity (TFP). This paper attempts to analysis trend of, technical efficiency, technological change and TFP growth in the Malaysian manufacturing sector. The analysis is based on data from the Industrial Manufacturing Survey of 1985 to 2000 collected by the Department of Statistics Malaysia using Data Envelopment Analysis (DEA). The results show that during the period under study, TFP growth is increasing and the major contribution of TFP growth in technical efficiency. Nevertheless, technological change show increasing trend over time. The industries that experienced high technical efficiency are food, wood, chemical and iron products. However, for food and wood industries technical progress is higher than technical progress. The other industry that shows larger technical progress than technical efficiency is textile industry but both values are below unity.

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File URL: http://mpra.ub.uni-muenchen.de/1956/
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File URL: http://mpra.ub.uni-muenchen.de/1966/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1956.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:1956

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Keywords: Technical efficiency; technological change; and total factor productivity;

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  1. 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.
  2. Haskel, Jonathan & Martin, Christopher, 1993. "Do Skill Shortages Reduce Productivity? Theory and Evidence from the United Kingdom," Economic Journal, Royal Economic Society, vol. 103(417), pages 386-94, March.
  3. AO Lansink, 2000. "Productivity growth and efficiency measurement: a dual approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(1), pages 59-73, March.
  4. Mahadevan, Renuka & Kim, Sangho, 2003. "Is output growth of Korean manufacturing firms productivity-driven?," Journal of Asian Economics, Elsevier, vol. 14(4), pages 669-678, August.
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Cited by:
  1. Tariq Mahmood & Ejaz Ghani & Musleh-Ud Din, 2006. "Efficiency of Large-scale Manufacturing in Pakistan: A Production Frontier Approach," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 689-700.

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