New efficiency measure transforms traditional Malmquist index into Total Factor Productivity.
A new way to measure inefficiency in graphs was developed for the Proportional Directional Distance Function. By using this new measure, a Malmquist productivity index was introduced, which can show Total Factor Productivity. This is a new finding because the traditional Malmquist index was not considered a TFP index before. The researchers also suggested a new way to break down the Malmquist index, showing how productivity change is affected by output and input changes.