Total Factor Productivity and the Bio Economy Effects

Abstract

This paper develops a new measure of total factor productivity growth in agricultural Production which incorporates Bio Economic components effects.The new measure is called the Bio Economic-Oriented Total Factor Productivity (BTFP) index, and incorporates components of Bio Economic as liquid biofuels. BTFP measure changes in Bio Economic efficiency and can be decomposed into bio economy efficiency change (BEC), and Bio Economic technological change (BTC) components.An empirical analysis, involving 7 Central American countries-level during 1980-2007, is provided using DEA methods. The results have shown a positive annual growth in bio economy total factor productivity of 1.1 percent.  This change is explained by 0.03 percent per year in the bio economy efficiency change (or bio economy catch-up) and bio economy technical change (or bio ethanol frontier-shift) is providing 0.09 percent.