The Evaluation of the Total Factor Productivity in Iran's Manufacturing Sector

The aim of this paper is to study the total factor productivity variation and measurement of the technical efficiency in Iran's manufacturing sector. For this purpose, the productivity of 130 different industrial groups in the 1996- 2007 period was analyzed using the Malmquist index and the data envelopment analysis approach on the basis of International Standard Industrial Classification (ISIC). The results of the study show that the total factor productivity in the manufacturing sector is decreased because the pure technical efficiency and the scale efficiency have decreased. Refined petroleum products industries have had the greatest growth of the total factor productivity through the technological change. Also, shipping industries have had the greatest decline of the total factor productivity. The total factor productivity in most industries has been variable, and 18 industries have had positive total factor productivity changes. The averages of technical efficiencies in Iran's manufacturing sector, with the assumption of constant return to scale and variable return to scale, are 0.42 and 0.34 respectively. Also, the average of scale efficiency in industries is 0.79.