THE DYNAMICS OF TOTAL FACTOR PRODUCTIVITY OFMEDIUM AND LARGE MANUFACTURING IN INDONESIA
Abstract
This paper calculates and decomposes the Total Factor Productivity (TFP) for large and medium scale industry in Indonesia covering the period of 2000-2009. By using Data Envelopment Analysis (DEA) method, the result shows there is a shift of the supporting factors on the growth of TFP on manufacturing sector within the 2 (two) sample period. In the period of 2000-2004, efficiency change becomes the main contributor on the growth of TFP. Whereas in the period of 2005-2009, technical change becomes the main supporting factor of TFP,however it goes along with the growth of negative efficiency change or the decline of the company’s catching-up effect ability to adapt with the more advance technology. The grouping of the sample across subsectors, technical change and also efficiency change shows the declining amount of manufacture industry with superior productivity. Furthermore, the number of low and weakening catching-up industry is increasing.
Keywords: Indonesian manufacturing, total factor productivity, technical change, efficiency change, economic scale change, Data Envelopment Analysis
JEL Classification: L6, M11
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References
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