Page 37 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.77, # 1, 2020, pp. 31-50

−1
( , ) = [ . { = ( , ) ∈ ( )}] (13)
0
0
0
0
0

It gives the output in the period t (inputs are constant). The distance of this
production to the technology boundary in the period s reaches the form:

( ) = { , }; ≥ 0, ≥ 0, ∀ℎ = 1 … (14)
ℎ
ℎ
ℎ
ℎ

If the period s and t are greater than one (small), then the TFV representation
generated in this way is positive (negative) Malmquist Index. Distance functions in
this productivity index can be rearranged in order to show that they are equivalent to
the product of technical efficiency change index and technological change index
(Coelli, et al., 1998: 292).
1/2

( , , , ) = ( , ) [ ( , ) ( , ) ] (15)
0
0
0

0

( , )
( , )
( , )
0
0
0

The equation (1,42) consists of the multiplication of "Efficiency Change" and
"Technological Change", which measure changes in output-oriented technical
efficiency in period’s s and t and changes in technology between the two periods.
The change in efficiency refers to the ratio of the technical efficiency in the period t
to the technical efficiency in the period s (Candemir & Deliktaş, 2006: 4).

0
Efficiency change (EC) = ( , ) (16)

( , )
0

0
0
Technological Change (TC) = [ ( , ) ( , ) ] 1/2 (17)

( , ) ( , )
0
0

Where, Change in Efficiency is the change index in technical efficiency under
constant return to scale. While this index is the best effect of capturing the
production limit for each observation between periods s and t, the Technological
Change index is the change in the technical efficiency limit. TFP change is
expressed as the product of the change in technical efficiency and technological
change (Candemir & Deliktaş, 2006: 4).

While this index is expressed as the effect of capturing best production limit for each
observation between period’s s and t, Technological Change Index is expressed as
the change in the boundary of technical efficiency. TFP change is expressed as the
multiplication of the change in technical efficiency and technological change
(Candemir & Deliktaş, 2006: 4).

,
= (18)

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