The global trends of total factor productivity: evidence from the nonparametric Malmquist index approach

In this paper the Malmquist index of total factor productivity is applied to a sample of 87 countries observed over the period 1960–90. This index and the method needed to quantify it, data envelopment analysis, have substantial advantages as compared to traditional growth accounting. Two of these advantages are that they do not rely on questionable equilibrium assumptions to merge multiple inputs into a single index and that the rate of total factor productivity growth can be explicitly decomposed into a measure of efficiency change and the rate of technological progress. Results are reported both in the form of growth rates and measures of relative productivity levels. In each case related labor productivity measures are calculated and the differences from the total factor productivity measures are analyzed. Among the topics covered are the productivity slowdown, the Asian Miracle and the bimodality of the distribution of relative productivity levels.