ISSN 2756-3677
International Journal of Banking, Economics and Finance ISSN: 8201-4728 Vol. 4 (3), pp. 001-008, March, 2020. © International Scholars Journals
Full Length Research Paper
Decomposing productivity growth in Malaysian food manufacturing industry
Nordin Hj. Mohamad1* and Fatimah Said2
1Institute of Mathematical Sciences, University of Malaya, 50603 Kuala Lumpur, Malaysia.
2Faculty of Economics and Administration, University of Malaya, Malaysia.
Accepted 17 October, 2019
Abstract
In this study, a mathematical programming-based optimization technique known as data envelopment analysis, DEA is used to compute and analyze the decomposition of Malmquist index of total factor productivity, TFP into technological change, technical efficiency change and scale efficiency change by utilizing an output-oriented DEA model under the assumptions of constant and variable returns to scale. The methodology is applied to selected 5 -digit Malaysian food manufacturing sub- industries using annual time-series data for the period 2002 to 2007. The results suggest that the TFP growth is largely due to positive technological change or frontier shift rather than technical efficiency change.
Key words: Data Envelopment Analysis, Malmquist productivity index, technological change, technical efficiency change.