Total Factor Productivity and Economic Growth in Indonesia

Pierre van der Eng

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

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.

Keywords: economic growth; Indonesia; productivity (search for similar items in EconPapers)
JEL-codes: N15 O11 O47 O53 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2009
New Economics Papers: this item is included in nep-eff, nep-fdg, nep-hrm and nep-sea
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2009-01

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