MFP reflects the overall efficiency with which labour and capital inputs are used together in the production process. Changes in MFP reflect the effects of changes in management practices, brand names, organizational change, general knowledge, network effects, spillovers from production factors, adjustment costs, economies of scale, the effects of imperfect competition and measurement errors. Growth in MFP is measured as a residual, i.e.
1  importance of global value chains might be key to explaining the influence of global factors on domestic inflation.2 The significance of these global factors has continued to be examined empirically. For a better understanding of the role of these global factors in domestic inflation, I would like to make three points here.