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A Fresh Look at the Decomposition of Total Factor Productivity Growth: New Evidence Using the Färe-Primont Productivity Index

THAI-HA LE|DAO LE VAN
경제연구소 (Hanyang Economic Research Institute)|2024.12|Journal of Economic Development|제49권 제4호|pp. 43-69|DOI 10.35866/caujed.2024.49.4.003

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키워드

VietnamStochastic Frontier AnalysisSustainable Economic GrowthFäre-Primont
주제분류경제학

초록

This study assesses Vietnam’s economic growth from 2002 to 2019 through the lens of total factor productivity (TFP), using panel data in 63 provinces and cities. It uses the Färe-Primont index built on the stochastic frontier analysis method to decompose TFP into several components and overcome certain methodological shortcomings in previous work. The focus is on the critical roles of TFP and efficient capital allocation mechanisms in sustaining economic growth. The empirical results show that Vietnam has lost its growth momentum since 2015 and that the public sector makes less efficient use of resources than the private sector. The study thus provides some policy implications for Vietnam to target sustainable TFP growth path in the coming years. The findings can be helpful for the future assessment of sustainable (economic) growth during the post-COVID period and further analysis of technical issues in the calculation of TFP.

Abstract

This study assesses Vietnam’s economic growth from 2002 to 2019 through the lens of total factor productivity (TFP), using panel data in 63 provinces and cities. It uses the Färe-Primont index built on the stochastic frontier analysis method to decompose TFP into several components and overcome certain methodological shortcomings in previous work. The focus is on the critical roles of TFP and efficient capital allocation mechanisms in sustaining economic growth. The empirical results show that Vietnam has lost its growth momentum since 2015 and that the public sector makes less efficient use of resources than the private sector. The study thus provides some policy implications for Vietnam to target sustainable TFP growth path in the coming years. The findings can be helpful for the future assessment of sustainable (economic) growth during the post-COVID period and further analysis of technical issues in the calculation of TFP.

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