Total factor productivity

Total factor productivity (TFP) measures the impact of technological change and changes in worker knowledge on the long-term output of a system. Total factor productivity is derived from increases in the levels of efficiency and technology. It is considered to be that portion of the growth of a system that is not explained by the amount of inputs inserted into the system. TFP is typically applied to an economy, rather than the output of a single organization. TFP is considered the primary driver of long-term growth.