Malaysia’s Food Manufacturing Industries Productivity Determinants


This study attempts to fill the gap in existing research on the drivers of total factor productivity growth (TFPG) in Malaysian food industries by employing a parametric statistical method and applying it to the country’s food-manufactur- ing sector. Based on the model, the factors affecting output growth in Malaysian food industries are individual contributions of capital, labour, and materials, as well as the combined contributions of the quality of these inputs expressed as TFPG. Our results for the food-manufacturing sector depict characteristically low productivity levels. The contribution of TFP growth for 13 out of 27 food industries was negative during the full period of analysis (1971-2000) and the sub-period 1987-2000. Eleven industries were found to have contributed negatively to TFPG over 1971-1979 and 1980- 1986. What explains our findings is the low quality of inputs into these food industries, which are input-driven rather than TFPG-driven.

Share and Cite:

E. Ahmed, "Malaysia’s Food Manufacturing Industries Productivity Determinants," Modern Economy, Vol. 3 No. 4, 2012, pp. 444-453. doi: 10.4236/me.2012.34057.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] Malaysian Industrial Development Authority (MIDA), “Medium and Long term Industrial Master Plan Malaysia (1986-1995),” Malaysian Industrial Development Authority, Kuala Lumpur, 1985.
[2] Ministry of International Trade and Industry (MITI), “Annual Report 1993-1995,” Ministry of International Trade and Industry Kuala Lumpur, 1985.
[3] D. W. Jorgenson, F. M. Gollop and B. Fraumenri, “Productivity and US Economic Growth,” Harvard University Press, Cambridge, 1987.
[4] M. Syrquin, “A Comparative Analysis of Structural Transformation in Latin America,” In: M. Urrutia, Ed., LongTerm Trends in Latin American Economic Development, Johns Hopkins University Press, Washington DC, 1991, pp. 81-116.
[5] H. Kawai, “International Comparative Analysis of Economic Growth: Trade Liberalization and Productivity,” Developing Economies, Vol. 11, No. 4, 1994, pp. 373-397.
[6] W. B. Gan and L. Y. Soon, “Input versus Productivity Driven Growth: Implications for the Malaysian Economy,” In: L. Y. Soon and N. Shyamala, Eds., The Seventh Malaysia Plan: Productivity for Sustainable Development, University Malaya Press, Kuala Lumpur, 1998.
[7] A. Wahab, “Total Factor Productivity Growth: Survey Report,” Asian Productivity Organization, Tokyo, 2004.
[8] V. Thomas and Y. Wang, “Distortions, Interventions, and Productivity Growth: Is East Asia Different?” Economic Development and Cultural Change, Vol. 44, No. 2, 1996, pp. 265-288. doi:10.1086/452213
[9] World Bank, “The East Asian Miracle: Economic Growth and Public Policy,” Oxford University Press, New York, 1993.
[10] W. B. Gan and E. Robinson, “Aggregate Supply and Wage Price Mechanism: Some Implications for Inflation Stabilization in Malaysia,” HIID-ISIS Seminar, Kuala Lumpur, 1993.
[11] Z. A. Zarina and A. Shariman, “Growth, Inflation and Potential Output,” Central Bank Discussion, Kuala Lumpur, 1994.
[12] G. J. Stigler, “Trends in output and Employment,” National Bureau of Economic Research, New York, 1947.
[13] M. Abramovitz, “Resource and Output Trends in the United States since 1870,” American Economic Review, Vol. 46, No. 2, 1956, pp. 5-23.
[14] J. W. Kendrick, “Productive Trends Capital and Labour,” Review of Economics and Statistics, Vol. 38, No. 3, 1956, pp. 248-257. doi:10.2307/1925777
[15] R. M. Solow, “The Production Function and the Theory of Capital,” Review of Economics Studies, Vol. 21, No. 2, 1956, pp. 101-108.
[16] R. M. Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, Vol. 39, No. 3, 1957, pp. 312-320. doi:10.2307/1926047
[17] J. W. Kendrick, “Productivity Trends in the United States,” Princeton, Princeton University Press, 1961.
[18] E. F. Denison, “The Sources of Economic Growth in the United States and the Alternative before Use,” Committee for Economic Development, New York, 1962, pp. 229-255.
[19] E. F. Denison and P. Edward, “Accounting of Slower Economic Growth; the United States in the 1970s,” The Brooking Institution, Washington DC, 1979.
[20] Z. Griliches and D. W. Jorgenson, “Capital Theory: Technical Progress and Capital Structure, Sources of Measured Productivity change Capital Input,” American Economic Review, Vol. 52, No. 1, 1962, pp. 50-61.
[21] R. Mahadevan, “Assessing the Output and Productivity Growth of Malaysia’s Manufacturing Sector,” Journal of Asian Economics, Vol. 12, No. 4, 2001, pp. 587-597. doi:10.1016/S1049-0078(01)00104-X
[22] R. F. Engle and C. W.J Granger, “Time-Series Econometrics: Cointegration and Autoregressive Conditional Heteroskedasticity,” Nobel Prize Committee, Stockholm, 2003.
[23] A. Maisom, H. M. Ariff and N.Aini, “Productivity and Efficiency in Malaysian Manufacturing Sector,” First Malaysian Econometrics Conference, Kuala Lumpur, 6-7 April 1993.
[24] L. Choong and S. Y. Tham, “Total Factor Productivity in the Malaysian Manufacturing Sector Preliminary Results,” Jurnal Ekonomi Malaysia, Vol. 29, 1995, pp. 9-35.
[25] E. M. Ahmed, A. Khalid, Y. Zulkornain Y. and A. Zakariah, “Factors Determining Malaysian Manufacturing Sector Productivity Growth,” Asia Pacific Economics and Business Conference 2002 Theme: The Impact of Global Competitive Environment on Asian Economics, Business and Society, Kuching, 2-4 October 2002.
[26] S. Lall, “Malaysia: Industrial Success and the Role of the Government,” Journal of International Development, Vol. 7, No. 5, 1995, pp. 775-789. doi:10.1002/jid.3380070506
[27] A. Young, “A Tale of two Cities: Factor Accumulation and technological Change in Hong-Kong and Singapore,” National Bureau of Economic Research, Macroeconomics Annual, Vol. 7, 1992, pp. 13-54.
[28] A. Young, “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience,” Quarterly Journal of Economics, Vol. 110, No. 3, 1995, pp. 641-680. doi:10.2307/2946695
[29] J. I. Kim and L. Lawrence, “The Sources of Economic Growth of the East Asian Newly Industrialized Countries,” Journal of Japanese and International Economies, Vol. 8, No. 3, 1994, pp. 235-271. doi:10.1006/jjie.1994.1013
[30] M. Sarel, “Growth in East Asia: What We Can and Cannot Infer,” IMF Working Paper 95/98, International Monetary Fund, Washington DC, 1996.

Copyright © 2023 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.