TFP Growth, Technological Progress, Efficiency Changes: Empirical Evidence from Iranian Manufacturing Industries

The purpose of this paper is decomposition of total factor productivity (TFP) to technological progress, technical efficiency, allocative efficiency, scale effects in Iran’s manufacturing industries. For this, a stochastic Frontier production model was estimated for 135 manufacturing industries over the period 1379-1393. The findings showed that technological progress in 21 industrial groups has been grew on average 12 percent annually. In relation to technical efficiency many of technical industries have been weaken in using exist technologies or have been inefficient technically. The third factor findings showed that Iran’s manufacturing industries have been utilized from scale effects. In relation to allocative efficiency, also, all groups have experienced negative growth except Recycle group. In result, among components of total factor productivity, allocative efficiency has been more unfavorable and it refers to in Iran’s economy the resources allocate in unfavorable. On the base of the results, improvement in financing system, increasing in private sector capacitance, improvement in business space are suggested.