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Total Factor Productivity in the Malaysian Manufacturing Sector: Some Preliminary Results

Choong Pee-Yin, Tham Siew‐Yean

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Abstract

In view of the increasing importance of the manufacturing sector in Malaysia, this paper seeks to measure the rate of growth in total factor productivity (TFP) and its contribution to the growth of this sector. Using the Divisia index approach, the results of this study indicate that the rate of growth of TFP averaged at 0.64 per cent per annum between 1986-90. Further the average contribution of the growth in TFP to the growth of the manufacturing sector is only 4.67 per cent for the period of this study. The major contributor to manufacturing growth was found to be the growth in intermediate inputs.

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What this paper is about

In view of the increasing importance of the manufacturing sector in Malaysia, this paper seeks to measure the rate of growth in total factor productivity (TFP) and its contribution to the growth of this sector. Using the Divisia index approach, the results of this study indicate that the rate of growth of TFP averaged at 0.64 per cent per annum between 1986-90. Further the average contribution of the growth in TFP to the growth of the manufacturing sector is only 4.67 per cent for the period of this study. The major contributor to manufacturing growth was found to be the growth in intermediate inputs.

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Available abstract

In view of the increasing importance of the manufacturing sector in Malaysia, this paper seeks to measure the rate of growth in total factor productivity (TFP) and its contribution to the growth of this sector. Using the Divisia index approach, the results of this study indicate that the rate of growth of TFP averaged at 0.64 per cent per annum between 1986-90. Further the average contribution of the growth in TFP to the growth of the manufacturing sector is only 4.67 per cent for the period of this study. The major contributor to manufacturing growth was found to be the growth in intermediate inputs.

Key concepts: Total factor productivity, Manufacturing sector, Divisia index, Productivity, Index (typography), Economics, Manufacturing, Labour economics

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