Measuring the Growth of Total Factors Productivity (TFP) Based on the Decomposition of Frontier Function: A Case Study of Iranian Industries

Document Type : Research Paper

Authors

1 Economies of Scale, Efficiency, Decomposition, Total Factor Productivity (TFP).

2 Faculty of Economics at University of Sistan and Baluchestan

Abstract

This article analyzes the rate of technical progress (TP) and total factor productivity (TFP) of 140 Iranian industries using the stochastic frontier approach (SFA). The results show that the highest growth rate of technical progress during the years 1995-2007 was related to the manufacture of plastics in primary forms as well as the manufacture of synthetic rubber, motor vehicles, and basic iron and steel. The research findings also imply that, firstly, the average growth of TFP was about 1.28 and, secondly, the technical progress and technical changes respectively had the greatest effect on TFP in the industry sector. Furthermore, the manufacture of parts and accessories for motor vehicles and their engines, as well as the manufacture of motor vehicles, food products, and basic iron and steel had the highest growth rate of TFP.

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