Estimation of total factor productivity by growth accounting: Evidence from the Central Asian region

Abstract

The Central Asian (CA) countries have been transitioning from a centrally planned economy to a market economy since they gained independence at the beginning of the 1990s. As per the official data for 2022, Uzbekistan, which is located in the center of the CA region, has the Russian Federation (18.6%), China (17.8%), Kazakhstan (9.2%), and Turkiye (6.4%) as its top trading partners. This study evaluates the technological progress by estimating the total factor productivity (TFP) of the CA countries. The study uses data from Penn World Table 10.0 (PWT10.0), covering the period from 1991 to 2019. The main findings are as follows: 1) CA countries have shown steady development and noteworthy TFP growth rates; 2) TFP growth was negative in all countries from 1992 to 1997, except in China and Turkiye. But in terms of TFP growth, they outpaced even China and Turkiye between 1998 and 2007, maintaining high rates from 2008 to 2016, demonstrating the catch-up effect; 3) our estimates of TFP growth rates are consistent with figures reported by several other studies. 4) the most suitable econometric model is found to be generalized least squares (GLS) compared with pooled OLS (pOLS), fixed effects (FE), or random effects (RE).