ESTIMATION OF TOTAL FACTOR PRODUCTIVITY GROWTH IN AGRICULTURE SECTOR IN PUNJAB, PAKISTAN: 1970-2005

Productivity growth is of central importance to economic growth. In the study of Total Factor Productivity (TFP), Input and output growth indices have been estimated for Punjab’s agriculture for the period 1970 to 2005. The indices were calculated using the most commonly employed index number approach namely Tornqvist Theil approximation to divisia index. The Tornqvist-Theil index provides consistent aggregation of inputs and outputs under the assumptions of competitive behavior, constant returns to scale, Hicks-neutral technical change, and input-output separability. The results showed that annual average growth rate of input, output and TFP indices remained 1.46, 3.49 and 2.0 for the study period. The study also estimated that TFP contributed 57 percent of the output growth in Punjab’s agriculture during the study period.