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.