Multifactor productivity (MFP) reflects the overall efficiency with which labour and capital inputs are combined in the production process.
Changes in MFP capture the impact of various factors such as management practices, brand value, organisational change, general knowledge, network effects, spillovers, adjustment costs, economies of scale, imperfect competition, and possible measurement errors. MFP growth is measured as a residual — the portion of GDP growth that cannot be attributed to changes in labour or capital inputs. If input levels remain constant over two periods, any increase in output reflects changes in MFP.
The indicator is presented as an index, at current prices with 2015 as the reference year.
