Abstract:

The Malaysian government has implemented various development policies in the last two decades focusing on industrial productivity. For the transport equipment industry, its rapid growth has been largely supported by the heavy industrial policy launched in the 1980’s to promote some government-driven industries, namely automotive and shipbuilding production. This study is conducted to examine recent changes in total factor productivity, technical efficiency and technology in the transport equipment industry. Using the DEA-Malmquist Index approach and the 5-digit MSIC data for the period of 1992-2008, this study found positive changes in TFP, technical efficiency, and technology of the industry. All the evidence is consistent with the Malaysian government’s transformation initiative through technological upgrading of the industry.