Decomposition of total factor productivity growth in Türkiye regions: a panel stochastic frontier approach

Nadide Gülbay Yiğiteli () and Devran Şanlı ()
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Nadide Gülbay Yiğiteli: Ankara University
Devran Şanlı: Bartın University

Eurasian Economic Review, 2024, vol. 14, issue 2, No 3, 275-300

Abstract: Abstract This paper presents total factor productivity (TFP) growth analysis with a panel Stochastic Frontier Approach (SFA) for 26 Türkiye regions from 2004 to 2020. The study is a pioneer in the literature on decomposing TFP growth components at the regional level with the translog production function for the Turkish economy. This work has a fresh approach regarding adjusting the schooling of employment and involving macroeconomic factors in the inefficiency function. The numerous specification tests show considerable production inefficiencies. Therefore, the production frontier is estimated using the True Fixed Effects (TFE) model. The empirical findings reveal that human capital is the primary driver of output growth. Technical efficiency is estimated to be 90.6% on average, with 9.4% of potential output lost due to technical inefficiency. It has been determined that there has been technical progress in labor-saving. Trade has a negative effect on technical efficiency. These findings contribute to understanding TFP change in the Turkish economy with regional data.

Keywords: Total factor productivity; Economic growth; Translog production function; Stochastic frontier approach (search for similar items in EconPapers)
JEL-codes: O40 O47 R11 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40822-023-00255-7

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