The contribution of TFP growth to the growth of several processing and manufacturing sectors: the findings from an enterprise survey

Abstract

This study aims to examine the contribution of TFP to the growth of several processing and manufacturing sectors. The study applies the dynamic production function derived from a neoclassic model to measure the contribution of TFPto the output growth in some certain sectors. In addition, the study overcomes the endogeneity of inputs while estimating the production function and estimating the contribution of TFP to the output growth by applying the semi parameter technique proposed by Olley-Pakes (1996), later developed by Levinshon and Petrin methodology (2003). Using data from the survey implemented by Vietnam National Productivity Institute, the results from this study show that the contribution of TFP to the output growth in several processing and manufacturing sectors for all samples is 1.82%. Furthermore, the study has found that TFP’s contribution ratios to the output growth for manufacture of food products, textiles, wearing apparel, and leather and related products are 1.34%, 1.74%, 2.1%, and 2.9%, respectively. Similarly, the contribution of TFP is estimated at 2.3% for manufacture of chemicals and chemical products and 0.98% for manufacture of rubber and plastic products.