The Handbook of Globalisation, Second Edition
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The Handbook of Globalisation, Second Edition

Edited by Jonathan Michie

With contributions from the leading commentators in the field and an over-arching introduction from the editor, the concerns of this updated and revised Handbook are two-fold. Firstly, to redefine the concept of globalisation and dispel the haze that surrounds it through a systematic and thorough examination of the debate. Secondly, to advance the frontiers of current critical thinking on the role and impact of globalisation, on the winners and losers in the process, and on the implications for society, the economy and governance.
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Chapter 14: Productivity and Competition from a Global Point of View

Joseph Plasmans


* Joseph Plasmans 1 Introduction This chapter essentially deals with the interplay of productivity and competition. The productivity of a production unit1 is defined as the ratio of a measure of output produced by this production unit over a measure of input used during the same time period. If the input measure is comprehensive, then the productivity concept is called Total Factor Productivity (TFP) or Multifactor Productivity (MFP). We use TFP and MFP interchangeably, even if there is a slight difference between what they may include.2 If the input measure is (the number of) labour hours, then the productivity concept is called Labour Productivity (LP). Diewert (2006, p. 1) states that: A problem with the Total Factor Productivity concept is that it depends on the units of measurement for outputs and inputs. Hence TFP can only be compared across production units if the production units are basically in the same line of business so that they are producing the same (or closely similar) outputs and using the same inputs. Therefore, we concentrate in this chapter on firms as production units operating in the manufacturing market. Usually TFP growth (TFPG) or MFP Growth (MFPG) can be decomposed into factors such as technical change, technical efficiency (efficient allocation of inputs to outputs), scale effects, input- and output-mix effects (deviations of perfect competition, higher production capabilities), and other components that may be related to productivity changes (uncertainty) (see e.g., Morrison, 1999; Balk, 2008). Therefore, TFPG equals technical change when all the other TFPG decomposition...

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