An empirical productivity analysis of ASEAN economies in transition towards knowledge-based economy

An empirical productivity analysis of ASEAN economies in
transition towards knowledge-based economy

Over the past few decades, countries in the Association of South East Asian Nations (ASEAN) have achieved varying levels of economic development. In this paper, the nature and extent of productivity changes in Cobb-Douglas production function components and the growth of the knowledge economy of selected ASEAN countries, namely, Malaysia, Indonesia, Philippines, Thailand, Singapore plus South Korea are analyzed over the period 2005 to 2010. Utilising non-parametric Data Envelopment Analysis (DEA) and the Malmquist total factor productivity (TFP) index, individual country's efficiency and productivity
changes which took place within this period are estimated. Although there are vast numbers of studies conducted on firm-level and industry-level efficiencies, there is scant literature on inter-country productivity comparisons using the Malmquist productivity index (MPI). The Malmquist TFP index, calculated within the framework of DEA, is broken down into three constituent elements accounting for different sources of productivity growth, namely technological progress, efficiency change, and the effects of economies of scale. Our results indicate that the Philippines and Singapore reported the highest increase in TFP within the referred years, and this growth in productivity is derived from both technical efficiency gains and technological progress. On the other hand, for the knowledge economy model, there is a remarkable growth in TFP for Thailand and Philippines. A comparison with better performing countries helps to identify policies for further improvement in ASEAN member countries.

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