Resource Misallocation and Productivity Gaps in Malaysia
The reallocation of resources from low- to high-productivity firms can generate large aggregate productivity gains. The paper uses data from the Malaysian manufacturing census to measure the country's hypothetical productivity gains when movin...
| Main Authors: | , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/916081521465294530/Resource-misallocation-and-productivity-gaps-in-Malaysia http://hdl.handle.net/10986/29495 |
| Summary: | The reallocation of resources from low-
to high-productivity firms can generate large aggregate
productivity gains. The paper uses data from the Malaysian
manufacturing census to measure the country's
hypothetical productivity gains when moving toward the level
of within-sector allocative efficiency in the United States
to be between 13 and 36 percent. Across three census periods
in 2000, 2005, and 2010 (the most recent available), the
productivity gaps appear to have somewhat widened. This
suggests that the "catching-up" process remains a
challenge and a potential opportunity, particularly if total
factor productivity is expected to be the dominant source of
future economic growth. The simulations, based on different
magnitudes of the realization of hypothetical productivity
gains, show that Malaysia's gross domestic product
growth can potentially increase by 0.4 to 1.3 percentage
points per year over five years. The analysis accounts only
for resource misallocation within sectors. There may be
other, possibly large, resource misallocation across
sectors. If so, closing those gaps could boost total factor
productivity and gross domestic product growth even further. |
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