However, some recent studies (Aigner, Lovell & Schmidt, 1977; Meeusen & Van den Broeck, 1977) have used a stochastic frontier production model that allows decomposing TFPG into two components: technological progress (TP) and change in technical efficiency (TE).
In the present study we have used the stochastic production frontier approach to decompose TFPG of the total organized manufacturing industries in India and fifteen major industrialized states assuming that manufacturing industries in the states are not able to fully utilize the existing resources and technology because of various non-price and organizational factors that might have led to technical inefficiencies in production.
Here we discuss the methodology used in the efficiency literature for estimating stochastic production frontier and the decomposition of TFPG.
This detailed comparison of the postwar growth experience of Hong Kong and Singapore finds significant TFPG for the former and none for the latter.
They, too, find that TFPG is a relatively small component of overall LPG.
Chen shows that "nonproportional" quality improvements--scale effects, the uncertainty of the relationship between compensation and real human capital, and so on-would bias the estimates of TFPG.