Productivity Growth in the Medium Size Malaysian-industry Level: Primal and Dual Approaches

Abstract

This paper investigates the theoretical relationship between the primal and dual Total Factor Productivity (TFP) from the accounting measurement perspective and also assesses their accuracy in measuring unobserved TFP growth in the presence of market power (MP) and non constant returns to scale (NCRTS) in the case of the medium sized Malaysian industries. In support of this, this paper uses an empirical method to estimate TFP growth by using medium sized Malaysian manufacturing data at 5-digit SIC (Standard Industrial Classification) level. In order to achieve this objective, this paper first tests whether the sample of medium sized Malaysian industries have constant factor shares in total revenue. T-tests have been used to examine the hypothesis stating that factor shares in total revenue are constant over time. Finally, this paper compares the estimates of TFP growth to those of primal and dual TFP accounting measures.