Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 164: A Global Malmquist-Luenberger Productivity Index - an application to OECD countries 1990-2004

Dong-Huyn Oh ()
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Dong-Huyn Oh: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: The aim of this paper is to introduce an alternative measure that incorporates the concept of a global Malmquist productivity index with a directional distance function. Unlike a conventional geometric mean form of the Malmquist-Luenberger productivity index, this global index is circular and free from linear programming (LP) infeasibility. It can also be decomposed into certain sources of productivity growth such as efficiency change and technical change. The suggested methodology is employed in the analysis of 28 OECD countries over the period of 1990-2004. The empirical result shows that the northern European countries are found to have a higher productivity growth rate when compared with the rest of the OECD countries. Furthermore, we found that the main source of the productivity growth is technical change.

Keywords: Global Malmquist-Luenberger productivity index; Directional distance function; Productivity; Circularity

JEL-codes: C43; O47; Q53

29 pages, January 28, 2009

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