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Total Factor Productivity and Economic Growth in Indonesia

Author

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  • Pierre van der Eng

Abstract

This paper revisits the discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s economic growth during 1970-2007. It re-estimates the contribution of TFP to economic growth during this period on the basis of new estimates of GDP, capital stock, education-adjusted employment, and factor income shares. After accounting for the growth of capital stock and education-adjusted employment, the residual TFP growth was on average -0.2% per year during 1971- 2007. Capital stock growth and education-augmented employment growth explained 70% and 34%, respectively, and TFP growth -4%. Only during 2000-07 was TFP growth 1.7% per year, explaining 33% of GDP growth. The paper doubts that these results imply that the Indonesian economy did not experience the impact of technological change, as much of it may be embodied in the capital stock estimates.

Suggested Citation

  • Pierre van der Eng, 2009. "Total Factor Productivity and Economic Growth in Indonesia," Departmental Working Papers 2009-01, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2009-01
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2009/wp_econ_2009_01.pdf
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    Citations

    Blog mentions

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    Citations

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    Cited by:

    1. Kuboniwa, Masaaki, 2014. "A comparative analysis of the impact of oil prices on oil-rich emerging economies in the Pacific Rim," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 328-339.
    2. Rudi Purwono (a) and Mohammad Zeqi Yasin (b), 2020. "Does Efficiency Convergence of Economy Promote Total Factor Productivity? A Case of Indonesia," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(4), pages 69-91, December.
    3. Wong Mei Foong & Tan Hui Boon & Lee Yoong Hon, 2014. "Efficiency and Productivity Gains in Knowledge-Based Production: The Case of East Asian Economies," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 122-143.
    4. Mitsuhiko Kataoka & Kodrat Wibowo, 2014. "Decentralization and Spatial Allocation Policy of Public Investment in Indonesia and Japan," Working Papers in Economics and Development Studies (WoPEDS) 201403, Department of Economics, Padjadjaran University, revised Feb 2014.

    More about this item

    Keywords

    economic growth; Indonesia; productivity;
    All these keywords.

    JEL classification:

    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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