TOTAL FACTOR PRODUCTIVITY CHANGE IN THE TURKISH MANUFACTURING INDUSTRY AT THE PROVINCIAL LEVEL

Metin KARADAĞ (Ege University)
A. Özlem ÖNDER (Ege University)
Ertuğrul DELIKTAŞ (Ege University)

The main aim of this paper is to estimate total factor productivity (TFP) change of the private and public sectors in the manufacturing industry in the selected provinces of Turkey by using panel data for the period 1990-1998. We employ data envelopment analysis (DEA) to compute Malmquist productivity indices, which are decomposed into two component measures namely efficiency change and technical change for the purpose of the study. The results show that there is no significant improvement in TFP due to the instability in economy in 1990s. The improvement in TFP is mainly explained by the efficiency change. We find that there is not significant difference between public and private sectors as far as TFP change is concerned. The results reveal that provinces that are on the production frontier show less improvement, whereas some provinces with low efficiency levels at the beginning experience relatively high TFP changes due to catching up process.