Assessment of Green Total Factor Productivity Impact on Sustainable Indonesia Productivity Growth

AbstractThis paper explores the concept of Green Total Factor Productivity (GTFP) for low carbon economic development towards sustainable development in Indonesia. Evaluating the effect of CO2 intensity to the total factor productivity (TFP) can be usedin government policy intervention to enhance productivity growth and to reduce CO2 emissions. This study made an analysis on time series data of Gross Domestic Product (GDP), labor productivity, capital stock and CO2 intensity emissions. The data, from 1992 until 2012, were assessed using growth accounting method (GAM). TFP growth without CO2 (TFP-CO2G) in general gave the smallest contribution to the economic growth from 1976 until 2011 at -0.62%. The average TFP-CO2G infivegrowth that internalized CO2 emission (TFP+CO2G) from 1976 until 2010 reached -1.83% in average per year. The average of TFP+CO2G in the five phases of Indonesia economic development reached the highest level on 1.20% andthe lowest level on -4.81%. In the same period of time, the growth of CO2 mission reached 6.62% in average per year. The highest average growth of CO2 emission reached 11.4% and the lowest reached 4.04%.In conclusion, this paper states that GTFP wouldimproveproductivity growth and emission reduction. This can be a concept of national policy to enhance sustainable economy development