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

Sangho Kim and Mazlina Shafi'i

Asian-Pacific Economic Literature, 2009, vol. 23, issue 1, 48-65

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.

Date: 2009
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