COMPARATIVE EVALUATION OF COMMON MEASURES OF TOTAL FACTOR PRODUCTIVITY:Evidence from South Asia

Total factor productivity (TFP) growth is described as the unexplained part of economic growth which captures the effects of economies of scale, foreign direct investment, education expenditures, technological growth, and so on. Three methods are commonly used to measure TFP growth: growth accounting, index number and econometric method. The objectives of this study is to measure and compare the trends of TFP growth estimated through the above mentioned three methods in South Asia for the sample period 1990-2013. The results indicate that the trends of TFP growth during the sample period in the selected panel remained cyclical but the overall average growth rate of TFP remained positive. Moreover, the econometric method produced consistent trends of TFP growth relative to those produced through growth accounting and index number methods.