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Factor Determinants of Total Factor Productivity Growth in Malaysian Manufacturing Industries: a decomposition analysis

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  • Sangho Kim
  • Mazlina Shafi'i

Abstract

To decompose total factor productivity growth into technical progress, technical efficiency change, allocative efficiency change, and scale efficiency change, a stochastic frontier approach was applied to Malaysian manufacturing data covering the period 2000 to 2004. The results show that total factor productivity was driven mainly by technical progress but was hurt by deteriorating technical efficiency. Scale efficiency and allocative efficiency also exerted significant influences on total factor productivity. The skill and quality of workers were the most important determinants of technical efficiency, whereas foreign ownership, imports, and employee quality underpinned technical progress. The impact of firm size on scale economies differed across industries. Copyright © 2009 The Authors. Journal compilation © 2009 Crawford School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd.

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  • Sangho Kim & Mazlina Shafi'i, 2009. "Factor Determinants of Total Factor Productivity Growth in Malaysian Manufacturing Industries: a decomposition analysis," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 23(1), pages 48-65, May.
  • Handle: RePEc:bla:apacel:v:23:y:2009:i:1:p:48-65
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    File URL: http://hdl.handle.net/10.1111/j.1467-8411.2009.01222.x
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    References listed on IDEAS

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    1. Subal Kumbhakar & M. Denny & M. Fuss, 2000. "Estimation and decomposition of productivity change when production is not efficient: a paneldata approach," Econometric Reviews, Taylor & Francis Journals, vol. 19(4), pages 312-320.
    2. Sangho Kim & Young Hoon Lee, 2006. "The productivity debate of East Asia revisited: a stochastic frontier approach," Applied Economics, Taylor & Francis Journals, vol. 38(14), pages 1697-1706.
    3. Gerald Granderson, 1997. "Parametric analysis of cost inefficiency and the decomposition of productivity growth for regulated firms," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 339-348.
    4. repec:pje:journl:article1997winiv is not listed on IDEAS
    5. Sangho Kim & Gwangho Han, 2001. "A Decomposition of Total Factor Productivity Growth in Korean Manufacturing Industries: A Stochastic Frontier Approach," Journal of Productivity Analysis, Springer, vol. 16(3), pages 269-281, November.
    6. Sangho Kim, 2003. "Identifying And Estimating Sources Of Technical Inefficiency In Korean Manufacturing Industries," Contemporary Economic Policy, Western Economic Association International, vol. 21(1), pages 132-144, January.
    7. K.P. Kalirajan & M.B. Obwona & S. Zhao, 1996. "A Decomposition of Total Factor Productivity Growth: The Case of Chinese Agricultural Growth before and after Reforms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 331-338.
    8. 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.
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    1. repec:ssi:jouesi:v:1:y:2013:i:1:p:55-66 is not listed on IDEAS
    2. Melaku T. Abegaz, 2013. "Total Factor Productivity and Technical Efficiency in the Ethiopian Manufacturing Sector," Working Papers 010, Ethiopian Development Research Institute.

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