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Decomposing Total Factor Productivity Growth in Manufacturing and Services

Author

Listed:
  • Neil Foster-McGregor

    (United Nations University–Maastricht Economic and Social Research Institute on Innovation and Technology)

  • Bart Verspagen

    (United Nations University–Maastricht Economic and Social Research Institute on Innovation and Technology)

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.

Suggested Citation

  • Neil Foster-McGregor & Bart Verspagen, 2017. "Decomposing Total Factor Productivity Growth in Manufacturing and Services," Asian Development Review, MIT Press, vol. 34(1), pages 88-115, March.
    • Handle: RePEc:tpr:adbadr:v:34:y:2017:i:1:p:88-115
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    Citations

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    Cited by:

    1. Ying Wang & Yunqing Wang & Wenjie Pan, 2020. "Estimating Productivity of Manufacturing Sector in Shanghai: A Comparative Study," International Business Research, Canadian Center of Science and Education, vol. 13(10), pages 1-39, October.
    2. Tengfei Huo & Hong Ren & Weiguang Cai & Wei Feng & Miaohan Tang & Nan Zhou, 2018. "The total-factor energy productivity growth of China’s construction industry: evidence from the regional level," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 92(3), pages 1593-1616, July.
    3. Fernández, Rafael & Palazuelos, Enrique, 2018. "Measuring the role of manufacturing in the productivity growth of the European economies (1993–2007)," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 1-12.
    4. Maja Bacovic & Zivko Andrijasevic & Bojan Pejovic, 2022. "STEM Education and Growth in Europe," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 2348-2371, September.
    5. Maja Bacovic & Zivko Andrijasevic & Julija Cerovic Smolovic, 2022. "Structural Changes and Growth in Europe: Are Knowledge-intensive Services Changing Paradigm of Expansion of Services as a Long-term Growth-diminishing Factor?," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(2), pages 124-143, February.
    6. Zhang, Weike & Meng, Jia & Tian, Xiaoli, 2020. "Does de-capacity policy enhance the total factor productivity of China's coal companies? A Regression Discontinuity design," Resources Policy, Elsevier, vol. 68(C).

    More about this item

    Keywords

    manufacturing and services; structural decomposition; total factor productivity;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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