A Fresh Look at the Decomposition of Total Factor Productivity Growth: New Evidence Using the Färe-Primont Productivity Index

Thai-Ha Le () and Dao Le Van
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Thai-Ha Le: VinFuture Prize, VinFuture Foundation, Vietnam & IPAG Business School, France
Dao Le Van: Fulbright University Vietnam, Vietnam

Journal of Economic Development, 2024, vol. 49, issue 4, 43-69

Abstract: This study assesses Vietnam’s economic growth from 2002 to 2019 through the lens of total factor productivity (TFP), using panel data in 63 provinces and cities. It uses the Färe-Primont index built on the stochastic frontier analysis method to decompose TFP into several components and overcome certain methodological shortcomings in previous work. The focus is on the critical roles of TFP and efficient capital allocation mechanisms in sustaining economic growth. The empirical results show that Vietnam has lost its growth momentum since 2015 and that the public sector makes less efficient use of resources than the private sector. The study thus provides some policy implications for Vietnam to target sustainable TFP growth path in the coming years. The findings can be helpful for the future assessment of sustainable (economic) growth during the post-COVID period and further analysis of technical issues in the calculation of TFP.

Keywords: Färe-Primont; Stochastic Frontier Analysis; Sustainable Economic Growth; Vietnam (search for similar items in EconPapers)
JEL-codes: G28 O47 Q01 R11 (search for similar items in EconPapers)
Date: 2024
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