Measures of capacity realisation and productivity growth for Bangladesh food processing industries

Abstract

This paper evaluates the performance of firms in the Bangladesh food processing industries in terms of their productive capacity realisation and total factor growth. Using the random coefficient frontier production function is used for this purpose, the total factor productivity growth is decomposed into a change in productive capacity realisation and technical progress. Empirical results show that there is some technological progress in a number of the food processing industries, however, the overall poor performance of this sector is due to the low capacity realisation of many individual firms, even after the implementation of economic reforms. The results also show that output growth in recent years was mainly do to input growth.