Analysis of Factors Affecting Total Factor Productivity of Rural Small Industries Sponsored by Jihad Agriculture Organization of Isfahan Province

This research was conducted to measure the total factor productivity (TFP) of the rural small industries in Isfahan province comprising six types of industries: food, textile, metal, non-metal mineral, chemical, and cellulose. Among the 166 rural small industries sponsored by Jihad-Agriculture Organization of Isfahan in 2001(1380), 60 plants were selected. Cross-section information collected from the 60 plants by a questionnaire in that year confirmed the body of data for this study. The distribution of the types of the 60 selected plants followed the distribution of the types in the plant population. The analytical part of this research consisted of two sections. In the first section, the TFP of the rural small industries was established by applying Cobb-Douglas production function in which the value of the plant production was the dependent variable and the investment costs, total hours of labor, costs of raw materials, and the costs of energy and water were the independent variables. Factors affecting TFP were analyzed in the second section. The estimated coefficients of the first section and the actual data of the variables, were used to calculate the TFP for each plant. Then, another regression model was worked out in which the calculated TFPs were the dependent variable. The independent variables included the mean of the number of the employees' children, the percentage of the production employees with at least primary school level of education, annual number of the off days, dummy variable for the members of the cooperative association, and a few other variables. The results of the first section showed that the TFP of food industries was higher than that of other types of industries and there was no significant difference between the TFP of textile, metal, non metal mineral, chemical and cellulose industries. The results of the analysis for determining the factors affecting the TFP, showed that the existence of a research section in the plant, the insurance of the employees and the mean of the number of employees' children had a positive effect on the TFP. But, the level of the education of the production workers, the area of the plant buildings, and the number of the days off in plant had negative effects.