Does Efficiency Convergence of Economy Promote Total Factor Productivity? A Case of Indonesia

This study investigates the relation between the efficiency converging moment and Total Factor Productivity of Indonesia’s economy. The intriguing finding is that although efficiency convergence was speeding towards the frontier as well as the catching-up patterns, the finding showed a negative productivity at a nearly zero level. Particularly, the negative productivities were mostly exhibited by Indonesia’s eastern regions. Technical Change that experienced a statistical downturn seemed to have discouraged this productivity. Variables such as investment might have played a significant role in this case. This study recommends making regulations on investment spending in each province, so that regional productivities can be improved.