Total Factor Productivity Growth, Technical Change and Technical Efficiency Change in Asian Economies: Decomposition Analysis

Abstract

The aim of this paper is to analyze total factor productivity (TFP) growth and its components in Asian countries applying Stochastic Frontier Analysis (SFA) to the time series data of 44 Asian countries from 2000 to 2010. Using Battese and Coelli approach, TFP is divided into technical efficiency change and technical change. TFP decomposition using SFA method for the years 1998 to 2007 indicates that in 75 % of these economies, the role of technical change in productivity growth is negative. Only in 11 countries technical change had a positive role in productivity growth. The growth of TFP shows that Japan has the highest productivity growth (2.55 %) and Saudi Arabia, Korea and Hong Kong are located in subsequent positions. Furthermore, due to the lowest technical progress, newly independent countries, such as Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan have the slowest TFP growth.