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The Productivity Debate of East Asia Revisited: A Stochastic Frontier Approach

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  • Young Hoon Lee
  • Sangho Kim

Abstract

This paper applies a stochastic frontier production model to the data from Penn World Table’s 49 countries over the period 1965-1990, to decompose total factor productivity growth into technical change and technical efficiency change. Empirical results show East Asian countries led the whole world in productivity growth, mainly because their technical efficiency gain was so much faster than that of other countries. East Asian countries also registered rapid technical change, which was comparable to that of the G6 countries after the late 1980s. The results provide evidence that negate the hypothesis that East Asian growth was mostly input-driven and unsustainable.

Suggested Citation

  • Young Hoon Lee & Sangho Kim, 2004. "The Productivity Debate of East Asia Revisited: A Stochastic Frontier Approach," Econometric Society 2004 Far Eastern Meetings 776, Econometric Society.
  • Handle: RePEc:ecm:feam04:776
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    References listed on IDEAS

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    1. Renuka Mahadevan, 2003. "To Measure or Not To Measure Total Factor Productivity Growth?," Oxford Development Studies, Taylor & Francis Journals, vol. 31(3), pages 365-378.
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    6. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
    7. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
    8. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200.
    9. Pack, Howard & Westphal, Larry E., 1986. "Industrial strategy and technological change : Theory versus reality," Journal of Development Economics, Elsevier, vol. 22(1), pages 87-128, June.
    10. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    11. 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.
    12. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
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    Cited by:

    1. Heru Margono & Subhash Sharma & Kevin Sylwester & Usama Al-Qalawi, 2009. "Technical efficiency and productivity analysis in Indonesian provincial economies," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 663-672.
    2. Maria Baquero Forero & Takanori Ida & Toshifumi Kuroda, 2015. "Institutions and Cultural Heterogeneity as Determinants of National Income: A Random-coefficients Stochastic Frontier Model," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 710-724, August.
    3. Kim, Sangho & Park, Donghyun & Park, Jong-Ho, 2009. "Productivity Growth in Different Firm Sizes in the Malaysian Manufacturing Sector: An Empirical Investigation," ADB Economics Working Paper Series 176, Asian Development Bank.
    4. W. R. Garside, 2012. "Japan’s Great Stagnation," Books, Edward Elgar Publishing, number 14624.
    5. Robin C. Sickles & Jiaqi Hao & Chenjun Shang, 2014. "Panel data and productivity measurement: an analysis of Asian productivity trends," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 12(3), pages 211-231, August.
    6. Sickles, Robin C. & Hao, Jiaqi & Shang, Chenjun, 2015. "Panel Data and Productivity Measurement," Working Papers 15-018, Rice University, Department of Economics.
    7. Sangho Kim, 2014. "Estimating Productivity Growth In The Korean Economy Without Restrictive Assumptions," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 520-532, April.
    8. Lee, Young Hoon, 2010. "Group-specific stochastic production frontier models with parametric specifications," European Journal of Operational Research, Elsevier, vol. 200(2), pages 508-517, January.
    9. 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.
    10. Seung Ahn & Young Lee & Peter Schmidt, 2007. "Stochastic frontier models with multiple time-varying individual effects," Journal of Productivity Analysis, Springer, vol. 27(1), pages 1-12, February.

    More about this item

    Keywords

    East Asian Growth; stochastic frontier production model; total factor productivity; technical progress; technical efficiency;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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