21 for TFPQ increased from 1.05 in 2000 to 1.07 in 2005 and 1.14 in 2010. The widening dispersions suggest that less efficient firms continue to operate instead of exiting the industry. The Kolmogorov-Smirnov (ksmirnov) test for equality of distribution functions shows that the log TFPQ distributions across the three censuses are significantly different.<sup>22</sup> Our focus is on TFPR, the revenue productivity, since the dispersions in TFPR are indicative of resource misallocation. It is important to reiterate that in this framework, in the absence of distortions, TFPR should equalize across firms in narrowly defined industries. Firms with higher TFPQ should have access to more capital and labor. Hence, these firms should have a higher output, and therefore charge a lower price. As such, they will register a TFPR similar to the smaller and less productive firms that would have compensated for their low TFPQ by charging higher prices. Panel b shows that the left tail of the log TFPR, TFPRsi distributions are also getting wider, suggesting that an increasing number of log( TFPR̅̅̅̅̅̅̅̅s ) unproductive firms are compensating for their lower productivity through higher prices. **Figure 13:** TFPQ and TFPR Dispersions in Three Census Periods <!-- Start of picture text --> .4<br><!-- End of picture text --> <!-- Start of picture text --> .3<br>Density.2<br><!-- End of picture text --> <!-- Start of picture text --> .1<br><!-- End of picture text --> <!-- Start of picture text --> 0<br><!-- End of picture text --> <!-- Start of picture text -->
-5<br><!-- End of picture text -->

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-3 -2 -1 0<br>TFPQ distribution<br>2010 2005<br>2000<br><!-- End of picture text -->

<!-- Start of picture text --> 2005<br><!-- End of picture text --> <!-- Start of picture text --> 1<br><!-- End of picture text --> <!-- Start of picture text --> 2<br><!-- End of picture text --> <!-- Start of picture text --> 3<br><!-- End of picture text --> <!-- Start of picture text --> .6<br>.4<br>.2<br>0<br>-3 -2 -1 0 1 2 3<br>TFPR distribution<br><!-- End of picture text --> <!-- Start of picture text --> Density.2<br><!-- End of picture text --> <!-- Start of picture text --> 2010<br>2000<br><!-- End of picture text --> <!-- Start of picture text --> 2005<br><!-- End of picture text --> Source: Authors’ own calculation Note: TFPQ = physical productivity; TFPR = revenue productivity.

The standard deviation of TFPQ for Malaysia (2010, 1.14) is almost similar to that of Turkey (1.11 in 2014,) (figure 14). However, it is higher than that of the United States (0.84 in 1997) and China (0.95 in 2005), but lower than that of India (1.23 in 1994). The estimated productivity gap among firms shows that firms in the 75<sup>th</sup> percentile are 4.7 times more productive than firms in the 25<sup>th</sup> percentile. The productivity gap increases to 19.5 times between firms in the 90<sup>th</sup> and 10<sup>th</sup> percentile. The productivity gap for Malaysian manufacturing firms in the 75<sup>th</sup> and 25<sup>th</sup> percentile is similar to Turkey’s, but lies between China’s (3.6 times) and India’s (5.0 times).

> 22 The two-sample Kolmogorov-Smirnov test for equality of distribution functions shows that log TFPQ distributions in 2000 and 2005, 2005 and 2010, and 2000 and 2010 reject the null hypothesis of the two sample distributions being equal, at a p- value of 0.0000.