Development of Methodologies to Estimate Philippine Capital Stock and a NSCB-based Total Factor Productivity (TFP)
Author: Virginia M. Bañados
The objective of this study was to develop methodologies in estimating the Capital Stock and Total Factor Productivity (TFP) of the Philippines. The initial stages of the project were spent on the review of literature, data evaluation and the generation of the required data series. Mid-way in the project period, the initial data series expected to be used in the estimation of both capital stock and TFP were not available and would not be available within the project period in the format, quantity and quality that is required for the estimation of TFP. An alternative compilation strategy was adopted to optimize the use of the existing national accounts series as inputs. This was through the use of relevant disaggregation of sectors with the intention of making TFP estimates a little easy to understand and interpret. The capital stock was estimated using Perpetual Inventory Method (PIM), and was estimated for non-residential construction, transport machinery and other machinery and equipment. TFP, on the other hand, was based on a growth accounting model and was estimated using the Tornqvist index formulation. This study also recommends that, at least in the short term, the TFP estimate as well as the capital stock estimates be revised as soon as latest data becomes available. Subsequently, in the medium term, estimates have to be revised as soon as the data series used to calculate parameters such as capital formation ratio (CFR) become available. And finally, in the longer term, TFP estimates need to be revised as soon Gross Domestic Product (GDP) series is revised.