A data envelopment analysis approach to understanding the productivity growth of Malaysia's manufacturing industries

A data envelopment analysis approach to understanding the productivity growth of Malaysia's manufacturing industries

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Article ID: iaor20031029
Country: Netherlands
Volume: 19
Issue: 4
Start Page Number: 587
End Page Number: 600
Publication Date: Dec 2002
Journal: Asia Pacific Journal of Management
Authors:
Keywords: statistics: data envelopment analysis, economics
Abstract:

This paper seeks to explain the productivity growth performance of Malaysia's manufacturing sector using panel data of 28 industries from 1981–1996. Here, the data envelopment analysis technique is used to calculate and decompose the Malmquist index of total factor productivity (TFP) growth into technical change, change in technical efficiency and change in scale efficiency. This allows the identification of the sources of productivity growth which is crucial for policy formulation. It was found that the annual TFP growth of the Malaysian manufacturing sector was low at 0.8% and this was driven by small gains in both technical change and technical efficiency, with industries operating close to optimum scale.

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