Structural Changes and Productivity Trends’ Evidence from Jordan’s Manufacturing Industry (2000 – 2014)

Abstract

This paper investigated the productivity in Jordan industry, and the impacts of innovations, structural changes, technological changes, foreign direct investment, investment, and the effect of treaty and regulations of world trade organization (W.T.O). In this paper, the data series collected are from different sources for the period 2001 – 2014. The data of inputs and outputs were transferred to logarithm. Translog method used an estimated series by least square series, once with dummies of industries and other times, without a translog prediction function. The other model is utilized in the analysis of data such as fixed effects and random effects to estimate the (KLAMS) function. Then, LML (Limited Maximum Likelihood) method to capture the coefficients of productivity manufacturing industries in Jordan and estimate the coefficients of independent variables such as chemical and fertilizer, petroleum and service sectors  among other factors of production function.Positive relationship remarked the signs of innovation and technology. TFP and W.T.O. were tagged time.(t-1) is used to show the impact of the total gross productivity on these variable, the elasticity for these variables sometimes  is too weak and in some cases, close to one. It means that capital and labor demands are more elastic than demand of materials, foreign direct investment and innovations and structural changes.  Hence, the paper presents an alternative set of estimates of TFP growth of Jordan manufacturing industry, the water demand increased in the period of the study within 8% while the industrial productivity increased 5.6% as a compound average.

Keywords: TFP (total factor productivity) translog production function,

Jell classification: D₂ / D₂₄.