TOTAL FACTOR PRODUCTIVITY OF THE CROATIAN ECONOMY

In this paper the sector productivity of Croatian economy is analysed, measured by the labour productivity and total factor productivity (TFP). The first part of the paper elaborates on the importance of productivity onto economic development and national economy growth worldwide, as well as in Croatia. Furthermore, contribution of individual authors in development of the concept of total factor productivity is analysed and methodological approach as the basis of the empirical part of the paper is given. Empirical analysis of total factor productivity and labour productivity is shown in the second part of the paper. Results of the analysis indicate a significant growth of TFP in certain sectors (financial sector about 22 percent), but also a decrease of TFP in a very important sector for Croatian economy, the processing industry, of approximately 10 percent. Productivity was calculated for three different disaggregations in the Croatian economy. This study points out to differences in the results obtained having in mind two different methods were used to calculate the productivity (labour productivity and TFP). In conclusion limitations and disadvantages of the survey which should be eliminated in further research are emphasized.