Sri Lanka’s Total Factor Productivity Change during Conflict and Post-Conflict Periods

Abstract

This study analyses Sri Lanka’s Total Factor Productivity (TFP) change during conflict and post-conflict periods to assess whether there has been any improvement during the post-conflict period using Solow’s Residual Method (SRM)) and an index number approach (Hicks-Moorsteen Total Factor Productivity Index - HMTFPI). Findings of both approaches reveal that the TFP growth during the conflict period was higher than that of the post-conflict period. Based on the decomposition of HMTFPI into Technological Change (TC) and Efficiency Change (EC) indices, it was revealed that the main source of TFP change throughout the sample period is TC. EC had been negative throughout the sample period.