Total Factor Productivity Growth in Indonesian Manufacturing: A Stochastic Frontier Approach

This paper examines the patterns of total factor productivity (TFP) growth and technical efficiency changes in Indonesia's manufacturing industries over the period 1988–2000. A stochastic frontier production has been employed to decompose the sources of TFP growth into technical progress, technical efficiency change and the effects of scale economies. The analysis takes into consideration the impact of the economic crisis in 1997.