A Nonparametric Estimation of Total Factor Productivity Growth of Manufacturing Firms

Md Shakil Ahmed, BRAC Research and Evaluation Division, Dhaka
M Daud Ahmed, Manukau Institute of Technology
Mohammed Ziaul Haider, Khulna University

Abstract: Growth of the manufacturing firms depends on the factors associated with both internal and external environments. Growth factors and growth indicators are inter-related. However, their relationships vary depending on: labour market, competition, technological adoption, investment opportunity and capability, industry sector, natural environment, local and regional influences, the strength of supply chain, and ethical and social aspects of business practices. Numerous research over the years has applied various economic theories and practices to identify the nature of their influence on business and manufacturing growths. This paper uses the Malmquist TFP Index to study the growth of agro-based manufacturing firms in a developing country and identifies the prime factors that influence their growth. It also investigates relationships among the business growth factors and growth indicators. This paper presents the top five factors that impede the growth of the manufacturing firms namely, lack of technological improvement, interruption in energy supply, lack of social security, uneven market competition, and uncertain natural disasters.