Decomposing total factor productivity growth in manufacturing and services

N. Foster-Mcgregor; B. Verspagen

doi:10.1162/ADEV_a_00082

Decomposing total factor productivity growth in manufacturing and services

N. Foster-Mcgregor^*, B. Verspagen

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

Using the World Input–Output Database, this paper calculates total factor productivity (TFP) growth for a sample of 40 economies during the period 1995–2009 to show that TFP growth in Asian economies has been relatively strong. In a number of Asian economies, TFP growth in services has outpaced that in manufacturing. This paper presents a novel structural decomposition of TFP growth and shows that the main drivers of aggregate productivity growth, as well as differences in productivity growth between services and manufacturing, have been changing factor requirements. These effects tend to offset the negative productivity effect of a declining ratio of value added to gross output.

Original language	English
Pages (from-to)	88-115
Number of pages	28
Journal	Asian Development Review
Volume	34
Issue number	1
DOIs	https://doi.org/10.1162/ADEV_a_00082
Publication status	Published - 2017

JEL classifications

d24 - "Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity"
o10 - Economic Development: General

Keywords

Manufacturing and services
Structural decomposition
Total factor productivity
economic growth
manufacturing
service sector
total factor productivity
Asia

Access to Document

10.1162/ADEV_a_00082Licence: CC BY

Cite this

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title = "Decomposing total factor productivity growth in manufacturing and services",

abstract = "Using the World Input–Output Database, this paper calculates total factor productivity (TFP) growth for a sample of 40 economies during the period 1995–2009 to show that TFP growth in Asian economies has been relatively strong. In a number of Asian economies, TFP growth in services has outpaced that in manufacturing. This paper presents a novel structural decomposition of TFP growth and shows that the main drivers of aggregate productivity growth, as well as differences in productivity growth between services and manufacturing, have been changing factor requirements. These effects tend to offset the negative productivity effect of a declining ratio of value added to gross output.",

keywords = "Manufacturing and services, Structural decomposition, Total factor productivity, economic growth, manufacturing, service sector, total factor productivity, Asia",

author = "N. Foster-Mcgregor and B. Verspagen",

note = "data source: GGDC 10-sector database, WIOD database (GGDC) Export Date: 7 September 2017 Correspondence Address: Foster-Mcgregor, N.; United Nations University, Maastricht Economic and Social Research Institute on Innovation and TechnologyNetherlands; email: foster@merit.unu.edu",

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AU - Verspagen, B.

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PY - 2017

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N2 - Using the World Input–Output Database, this paper calculates total factor productivity (TFP) growth for a sample of 40 economies during the period 1995–2009 to show that TFP growth in Asian economies has been relatively strong. In a number of Asian economies, TFP growth in services has outpaced that in manufacturing. This paper presents a novel structural decomposition of TFP growth and shows that the main drivers of aggregate productivity growth, as well as differences in productivity growth between services and manufacturing, have been changing factor requirements. These effects tend to offset the negative productivity effect of a declining ratio of value added to gross output.

AB - Using the World Input–Output Database, this paper calculates total factor productivity (TFP) growth for a sample of 40 economies during the period 1995–2009 to show that TFP growth in Asian economies has been relatively strong. In a number of Asian economies, TFP growth in services has outpaced that in manufacturing. This paper presents a novel structural decomposition of TFP growth and shows that the main drivers of aggregate productivity growth, as well as differences in productivity growth between services and manufacturing, have been changing factor requirements. These effects tend to offset the negative productivity effect of a declining ratio of value added to gross output.

KW - Manufacturing and services

KW - Structural decomposition

KW - Total factor productivity

KW - economic growth

KW - manufacturing

KW - service sector

KW - total factor productivity

KW - Asia

U2 - 10.1162/ADEV_a_00082

DO - 10.1162/ADEV_a_00082

M3 - Article

SN - 0116-1105

VL - 34

SP - 88

EP - 115

JO - Asian Development Review

JF - Asian Development Review

IS - 1

ER -