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Decomposition of total factor productivity growth in Türkiye regions: a panel stochastic frontier approach

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  • Nadide Gülbay Yiğiteli

    (Ankara University)

  • Devran Şanlı

    (Bartın University)

Abstract

This paper presents total factor productivity (TFP) growth analysis with a panel Stochastic Frontier Approach (SFA) for 26 Türkiye regions from 2004 to 2020. The study is a pioneer in the literature on decomposing TFP growth components at the regional level with the translog production function for the Turkish economy. This work has a fresh approach regarding adjusting the schooling of employment and involving macroeconomic factors in the inefficiency function. The numerous specification tests show considerable production inefficiencies. Therefore, the production frontier is estimated using the True Fixed Effects (TFE) model. The empirical findings reveal that human capital is the primary driver of output growth. Technical efficiency is estimated to be 90.6% on average, with 9.4% of potential output lost due to technical inefficiency. It has been determined that there has been technical progress in labor-saving. Trade has a negative effect on technical efficiency. These findings contribute to understanding TFP change in the Turkish economy with regional data.

Suggested Citation

  • Nadide Gülbay Yiğiteli & Devran Şanlı, 2024. "Decomposition of total factor productivity growth in Türkiye regions: a panel stochastic frontier approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(2), pages 275-300, June.
    • Handle: RePEc:spr:eurase:v:14:y:2024:i:2:d:10.1007_s40822-023-00255-7
    DOI: 10.1007/s40822-023-00255-7
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    More about this item

    Keywords

    Total factor productivity; Economic growth; Translog production function; Stochastic frontier approach;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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