Total Factor Productivity Dynamics in Sub-Saharan Africa: Malmquist Index Approach

Abstract

A panel dataset of 30 countries in Sub-Saharan Africa (SSA) is used to analyze the total factor productivity (TFP) growth pedigree over the period 1999-2011. We initially compute the output-oriented Malmquist productivity indexes and their decomposition using data envelopment analysis approach. The curiosity is to ascertain whether Malmquist indexes are catching-up or lagging behind. The results indicate that the marginal source of TFP growth is technical progress and that the regional disparities in TFP growth deteriorated over time. Fourteen countries representing 46.7% of the number under study have positive trend in both pure technical efficiency and scale efficiency each (53.3% lagging behind negatively). Also the efficiency change component (catch-up effect) result shown that only six countries representing 20% of the number under study have positive trend with 80% lagging behind negatively in the sub-region. The second-stage regression results using tobit model show that the eleven (11) identified GCI pillars globally advocated by the World Economic Forum Report 2011/2012 be the policy priorities for improving efficiency in particular and TFP in general for the SSA to optimally harvest the opportunities of the 21st century.
Key words: Total factor productivity; SSA; Malmquist productivity indexes and Tobit Model