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Total Factor Productivity and Economic Growth in Indonesia

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  • Pierre van der Eng

    ()

Abstract

This paper revisits the discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s economic growth during 1970-2007. It re-estimates the contribution of TFP to economic growth during this period on the basis of new estimates of GDP, capital stock, education-adjusted employment, and factor income shares. After accounting for the growth of capital stock and education-adjusted employment, the residual TFP growth was on average -0.2% per year during 1971- 2007. Capital stock growth and education-augmented employment growth explained 70% and 34%, respectively, and TFP growth -4%. Only during 2000-07 was TFP growth 1.7% per year, explaining 33% of GDP growth. The paper doubts that these results imply that the Indonesian economy did not experience the impact of technological change, as much of it may be embodied in the capital stock estimates.

Suggested Citation

  • Pierre van der Eng, 2009. "Total Factor Productivity and Economic Growth in Indonesia," Departmental Working Papers 2009-01, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2009-01
    as

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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2009/wp_econ_2009_01.pdf
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    Blog mentions

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    Cited by:

    1. Kuboniwa, Masaaki, 2014. "A comparative analysis of the impact of oil prices on oil-rich emerging economies in the Pacific Rim," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 328-339.

    More about this item

    Keywords

    economic growth; Indonesia; productivity;

    JEL classification:

    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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