In this paper we aim to measure and decompose the growth of frontier
total factor productivity (TFP) in Tunisia over the period 1983-2001. We
define frontier TFP growth as the shift of the economy’s production
frontier, which we obtain by solving for each year a linear program, a
sort of aggregate DEA analysis. We then decompose this aggregate
frontier TFP growth into changes in technology, terms of trade,
efficiency and resource utilization. We can also attribute frontier TFP
growth to its main beneficiaries: labor, decomposed into five types,
capital, decomposed into two types, and the allowable trade deficit.
We find that frontier TFP grew by about 1% a year after the introduction of the structural adjustment program of 1987. Labor, in particular unskilled labor, was the main beneficiary of frontier TFP growth. The Solow residual reflecting technological change was the main driver of frontier TFP growth. The terms of trade were not favorable to Tunisia. After 1992, while the Tunisian efficiency frontier moved outwards, the country moved away from its efficiency frontier.
JEL code: O47, O55
Keywords: total factor productivity growth, input-output, frontier analysis, Tunisia
UNU-MERIT Working Papers ISSN 1871-9872