Total Factor Productivity in South African Manufacturing C. Friedrich Kreuser (Stellenbosch University, UNU-WIDER) Carol Newman (Trinity College Dublin)
Total Factor Productivity in Manufacturing • Manufacturing is a key sector. • Little is known on the distribution and determinants of productivity within firms in South Africa. • Productivity here is defined as total factor productivity (TFP). • The portion of output (value added) not explained by the inputs. • Here, we focus on: two aspects of productivity • TFP by Firm Size • TFP in Selected Industries
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
Relative TFP by Firm Size 1 .8 .6 .4 .2 0 -4 -2 0 2 4 1-4 (25797) 5-9 (25334) 10-19 (25676) 20-49 (24004) 50-99 (8651) 100-249 (4659) 250-1000 (1660) 1000+ (219)
TFP Comparison for Selected Industries .8 .6 .4 .2 0 -2 -1 0 1 2 Textiles (783) Wearing Apparel (637) Non-Metalic Minerals (924) Chemicals (1245) Motor Vehicles and Parts (3710)
Implications • We can now start looking at the within and between sector determinants of Firm level Total Factor Productivity. • This will allow us to identify those characteristics that more productive firms share in order to better inform policy makers. • The size of the firms may be correlated with market power, so that mark-ups may be driving the observed difference in productivity. This means that we may need to better account for industry mark-ups when informing policies. • Productivity may be related to export status across size. • We can further analyse the impact of tax incentives on the productivity of firms.
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