Total Factor Productivity in Agriculture, Manufacturing, Construction and Services: 1980-2018

Ozan Bakış, Uğurcan Acar and Gökhan Dilek

In this research brief, we examine Total Factor Productivity (TFP) dynamics in Turkish economy for the four main sectors (agriculture, industry, construction and services). In the years between 1980 and 2018, all sectors record TFP increases except services. The cumulative increase in TFP is the highest in the industry sector with 110% growth rate followed by the agriculture with 48% in this 38-year period. TFP growth in construction fall behind the agriculture with a figure of 32.7 percent while in services, TFP decreases by 42 percent.

According to broad periodization we reach the following conclusions:

  • There are TFP increases in agriculture except in 80s. In the 1990-2002 and 2003-2013 periods, TFP increases at 1.5% rate on annual average while in the 2014-2018 period, TFP increases 3.1% annually.
  • In the 1981-1989 period, TFP in industry rises at a considerably high rate by 4.5% annual average. TFP increases at 4.6% on annual average in the 2011-2013 subperiod. TFP in industry sector increases in all the periods except the years of Global Financial Crisis, yet the growth rate of TFP is weak in the 90s. An interesting point is that the growth rate of TFP in industry in the years between 2014 and 2018 converges to the growth rates in the 90s.
  • In construction, TFP increases 3.2% on annual average while the 1990-2002 period witnesses 1.9% contraction. In the 2003-2013 period TFP grows by 4.8%. The 2014-2018 period records 2.5% decrease in construction TFP.
  • TFP in services declines in every period.

doc. ResearchBrief251

pdf. ResearchBrief251