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Estimation and Decomposition of Total Factor Productivity Growth in the EU Manufacturing Sector: a Stochastic Frontier Approach

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  • Marco Fioramanti

    (ISAE - Institute for Studies and Economic Analyses)

Abstract

In this paper the Stochastic Frontier approach was used for the estimation and decomposition of manufacturing TFP growth in 14 EU member countries, drawing upon the EU-KLEMS database. This study identifies some key issues: in the period 1970-2005, the TFP rate of change in the EU manufacturing sector constantly decreased, mainly due to the reduction in technical efficiency and, to a lesser extent, to the decline in the rate of growth of input factors and allocative efficiency. In the same period, the sector recorded considerable technical progress, which, nonetheless, did not offset the negative forces which pulled the EU TFP growth down, especially in the last decade of the sample period.

Suggested Citation

  • Marco Fioramanti, 2009. "Estimation and Decomposition of Total Factor Productivity Growth in the EU Manufacturing Sector: a Stochastic Frontier Approach," ISAE Working Papers 114, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    • Handle: RePEc:isa:wpaper:114
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    More about this item

    Keywords

    Stochastic frontier; Total Factor Productivity; Technical efficiency; Technical change; Allocative efficiency.;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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