TOTAL FACTOR PRODUCTIVITY GROWTH IN THE MALAYSIAN MANUFACTURING SECTOR

Fatimah Said; Saad Mohd. Said

doi:10.31436/ijema.v12i2.100

Authors

Fatimah Said Associate Professor, Department of Applied Economics, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia (email:fatimahs@um.edu.my)
Saad Mohd. Said Department of Applied Economics, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia.

DOI:

https://doi.org/10.31436/ijema.v12i2.100

Abstract

This study utilizes the standard growth accounting model to estimate Total Factor Productivity (TFP) growth for Malaysian manufacturing industries during 1982-1997 which includes two cyclical sub-periods 1982-1986 and 1987-1997. The estimates show high TFP growth among the heavy industries as compared to the medium and light industries. The average TFP growth for the manufacturing sector as a whole was found to be negative during 1982-1986. However, it improved in the second sub-period of 1987-1997 and recorded positive annual growth of 4.05 percent. This improvement presumably reflects to some extent the success of changes in government policy which have taken place since 1985. Still, the growth of the Malaysian manufacturing sector was governed by input-driven growth rather than productivity-driven growth.

JEL classification: D24

Key words: Total factor productivity, Heavy industry, Government policy