Endy Dwi Tjahjono
Donni Fajar Anugrah
Buletin Ekonomi Moneter dan Perbankan, Oktober 2007
A b s t r a c t
This paper investigates both the accumulation and the quality of the input factors with stochastic frontier production function model. The application of the model also enables us to predict the technical efficiency of the input factors for each province of Indonesia.
The model result shows that the capital and the labor share to output are 0.4 and 0.6 respectively. In all Indonesia regions, the quality of the labor or human capital affects the output, but the effect is so small, especially in East Indonesia. Meanwhile, the quality of capital is decreasing by the time and has a negative small coefficient for all regions.
The technical efficiency of all Indonesia regions has increased during the observation period. In the region side, the technical efficiency of the provinces in Sumatra has increased by the time, yet provinces
in the other regions tend to decrease. Meanwhile, the technological progresses with no different among regions have a decreasing TFP trend.
Keywords: Production, Capital and TFP, Model Stochastic Frontier with Panel Data