Multifactor productivity MFP reflects the overall efficiency with which labour and capital inputs are used together in the production process Changes in MFP reflect the effects of changes in management practices brand names organizational change general knowledge network effects spillovers from production factors
Total Factor Productivity TFP is the portion of output not explained by the amount of inputs used in production As such its level is determined by how efficiently and intensely the inputs are utilized in production TFP growth is usually measured by the Solow residual Let gY denote the growth rate of aggregate output gK
Definition of total factor productivity FTP Measure of the efficiency of all inputs to a production process Increases in FTP result usually from technological innovations or improvements
In economics total factor productivity TFP also called multi factor productivity is the portion of output not explained by traditionally measured inputs of labor and capital used in production TFP is calculated by dividing output by the weighted average of labor and capital input with the standard weighting of 0 7 for labor and