Firm Productivity in Bangladesh Manufacturing Industries

Abstract

This paper studies the correlates of firm total factor productivity (TFP) in Bangladesh using data from a recent survey of large manufacturing firms. TFP measures are obtained following Ackerberg, Caves and Frazer (2007) and using firm-specific deflators for output and inputs. Controlling for industry, location, and year fixed effects, we find that firm size and TFP are negatively correlated while firm age and TFP exhibit an inverse-U shaped relationship. We also find that managerial quality and global integration are positively associated with firm TFP. Finally, we find that power supply problems, heavy bureaucracy, and the presence of crime dampen firm TFP.

Keywords: Total Factor Productivity, Simultaneity and Production Functions, Skilled Labor, Openness, Business Environment, Asia, Bangladesh

JEL Classification: D24, F23, L25, O33