Total Factor Productivity and Institutional Indicators: Panel Data Analysis

Abstract

Total Factor Productivity (TFP) plays a very important role in achieving growth and development. The TFP level and its development process over time are an important determinant of the “diversity in the level of development” existing in today’s economies. This study examines the theorotical studies on the place and importance of TFP in economic theory and aims to discuss the relationships with respect to the institutions in the context of current discussions. In the study, the effect of institutional indicators on TFP for the period of 2005-2018 was analyzed with the panel data method in the model of 117 countries. The results of the analysis showed that the institutional indicators and the human development index have a positive and significant effect on the TFP level of countries.