Productivity, convergence and policy: a study of OECD countries and industries

This paper analyses trends in labour productivity and its underlying determinants in a panel of OECD countries from 1979 to 2002. Data Envelopment Analysis (DEA) is used to estimate a Malmquist measure of multifactor productivity (MFP) change. We decompose the growth in labour productivity into (i) net technological change (ii) input biased technical change (IBTC) (iii) efficiency change and (iv) capital accumulation. We analyse the effect of each of these factors in the transition towards the equilibrium growth paths of both labour productivity and per capita GDP for the OECD countries, controlling for the effects of different policies and institutions. The results indicate that on average gaps in productivity or income levels are narrowing down although there is no evidence to suggest that the entire OECD area comprises a single convergence “club”. Using kernel estimation methods we find that that labour productivity and per capita GDP are settling toward a twin peak (bimodal) distribution. Panel unit root tests over an extended (1960–2001) period provide general support for the convergence hypothesis. Analysis of the contributions of productivity growth within industries and sectoral composition changes show that aggregate productivity change is predominantly driven by ‘net’ within sector effects with very little contribution emerging from sectoral shifts (the ‘in-between’ static or dynamic effects resulting from higher or above average productivity industries gaining employment shares or low productivity industries losing shares).     

Australia’s mining productivity decline: implications for MFP measurement

This paper investigates the mining sector’s poor productivity performance as measured by the growth accounting formula for multifactor productivity (MFP) index during the recent mining boom in Australia. We provide an alternative measure of productivity growth by estimating a translog variable cost function, with parameters that separate productivity growth due to technical change from that due to the effects of returns to scale, capacity utilisation and natural resource inputs. The results show that the average MFP growth in Australian mining based on the dual cost-function measure of technical change is 2 % over the sample period 1974–1975 to 2007–2008, rather than ?0.2 % from the published index. The difference arises because declining natural resource inputs, the effects of capacity utilisation and returns to scale have all reduced the ‘true’ MFP growth.     

US TFP growth and the contribution of changes in export and import prices to real income growth

Using recent data from the Bureau of Economic Analysis, the Bureau of Labour Statistics (BLS), the Board of Governors of the Federal Reserve System and the US Department of Agriculture, the paper calculates the multifactor productivity (MFP) Growth for an Extended Business Sector of the US economy for the years 1987–2011. The Extended Business Sector (EBS) consists of the entire US economy less the inputs used and outputs produced by the Public Administration sector and less the US housing sector. The study found that MFP growth in the EBS averaged 1.157 % per year, somewhat higher than BLS MFP growth in the Private Sector which averaged 0.962 % per year. The study also produced estimates of MFP where a net output concept was used. Finally, the effects of changes in the prices of US exports and imports on real income growth was calculated using a translog model based on the work of Diewert and Morrison and Kohli.     

ECONOMETRICS FOR GRUMBLERS: A NEW LOOK AT THE LITERATURE ON CROSS‐COUNTRY GROWTH EMPIRICS

Abstract Since the seminal contribution of N. Gregory Mankiw, David Romer and David N. Weil in 1992 the growth empirics literature has used increasingly sophisticated methods to select relevant growth determinants in estimating cross‐section growth regressions. The vast majority of empirical approaches, however, limit cross‐country heterogeneity in production technology to the specification of total factor productivity, the ‘measure of our ignorance’. In this survey, we present two general empirical frameworks for cross‐country growth and productivity analysis and demonstrate that they encompass the various approaches in the growth empirics literature of the past two decades. We then develop our central argument, that cross‐country heterogeneity in the impact of observables and unobservables on output as well as the time‐series properties of the data are important for reliable empirical analysis.     

A comparison of multifactor productivity calculations of the U.S. agricultural sector

Since the late 1970s, there have been fourteen studies that have estimated multifactor productivity (MFP) growth rates for the U.S. agricultural sector. The estimates of average annual MFP growth rates have ranged from 1.15 to 1.94 percent per year for studies using the gross productivity approach. The purpose of this paper is to identify the reasons for these different estimates. We consider theoretical and empirical factors and do not find any single reason that satisfactory explains the variation. The alternative estimates appear to be most sensitive to the coverage of years.     

MEASUREMENT,EVOLUTION, DETERMINANTS,AND CONSEQUENCES OF STATE CAPACITY: A REVIEW OF RECENT RESEARCH

There is increasing realization that state capacity is a fundamental ingredient for effective governance, and is a crucial element of long‐run economic development. This paper offers an overview of the strengths and limitations in current empirical research on the measurement of state capacity. The paper also surveys the fast emerging literature on the determinants and effects of state capacity. We argue that existing measures on governance quality used in cross‐national research can be usefully exploited to capture different aspects of state capacity, and show that post the end of the Cold War, developing economies have experienced improvements in legal, administrative and bureaucratic capacity, but the gap with advanced economies is still wide. Future research should address the short temporal coverage of available measures of state capacity, as well as providing a systematic quantitative assessment of the determinants of capacity and of its effects on development outcomes, such as health and education, which have not received sufficient scrutiny.     

Certified and uncertified skills and productivity growth performance: Cross-country evidence at industry level

We analyse the relationship between human capital and productivity growth using a five-country multi-industry dataset together with a measure of human capital which accounts for both certified skills (educational qualifications) and uncertified skills acquired through on-the-job training and experience. We find evidence of positive human capital effects on growth in average labour productivity, particularly when using our composite human capital measure. We also find some tentative evidence that multi-factor productivity (MFP) growth is positively related to the use of high-skilled labour. However, externalities of this kind are largely confined to industries which make intensive use of university graduates.     

EFFECTS OF LABOR REALLOCATION ON PRODUCTIVITY AND INEQUALITY—INSIGHTS FROM STUDIES ON TRANSITION

From a theoretical perspective, the link between the speed and scope of rapid labor reallocation and productivity growth or income inequality is ambiguous. Do reallocations with more flows tend to produce higher productivity growth? Does such a link appear at the expense of higher income inequality? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, that is, the economic transition from a centrally planned to a market-oriented economy in CEE. We have collected over 450 estimates of job flows from the literature and used these inputs to estimate the short-run and long-run relationship between labor market flows, labor productivity, and income inequality. We apply the tools typical for a meta-analysis to verify the empirical regularities between labor flows and productivity growth as well as income inequality. Our findings suggest only weak and short-term links with productivity, driven predominantly by business cycles. However, data reveal a strong pattern for income inequality in the short run—more churning during reallocation is associated with a level effect toward increased Gini indices.     

Growth,productivity and diversification in Africa

The purpose of this article is to investigate the relationship among economic growth, productivity and diversification. Our results have shown that deepening diversification leads to improvements in total factor productivity among other determinants in African economies. The significance of the link between diversification and economic growth in the case of African economies cannot be gainsaid. It means that African countries can scale up their economies’ growth by raising their total factor productivity through pursuing policies that enhance diversification.     

POLLUTION'S ROLE IN REDUCING URBAN QUALITY OF LIFE IN THE DEVELOPING WORLD

This paper surveys the recent literature exploring the consequences of urban pollution in the developing world for a city's productivity and resident quality of life. The environmental Kuznets curve literature predicts that developing nations will experience significant environmental degradation as a byproduct of economic development. In contrast, the recent literature that we review reverses this logic by arguing that geographic areas featuring lower levels of pollution will experience economic growth through improvements in health and human capital. In an economy where pollution reduces worker productivity, inhibits child development and repels the skilled from living in such an area, those cities featuring less pollution have a competitive advantage in attracting and retaining the skilled. Given the central role that human capital plays in urban economic growth, such cities will be more likely to achieve sustainable long‐term growth.     

TRADE DIVERSIFICATION,INCOME, AND GROWTH: WHAT DO WE KNOW?

This paper surveys the empirical literature on export and import diversification and its linkages with growth. We review widely used measures of diversification and the evidence about their evolution focusing on how export diversification relates to trade liberalization and economic development. We also discuss the linkages between trade diversification and productivity at the firm and industry level, highlighting new advances on the linkages between import diversification and productivity.     

Productivity,Technology and Economic Growth: What is the Relationship?

The relationship between productivity, technology and economic growth has been debated extensively in the endogenous growth, growth accounting, New Economy and policy literature. This paper briefly surveys the literature on total factor productivity (TFP) calculations – the various techniques and problems associated with it. We argue that TFP is not a measure of technological change and only under ideal conditions does it measure the supernormal profits associated with technological change. The critical driving force of economic growth is not the super normal profits that technological change generates but rather the continuous creation of opportunities for further technological development. Six illustrations of when TFP fails to correctly measure these super normal profits are provided. A version Carlaw and Lipsey's (2003b) model of endogenous general purpose technology‐ driven growth is then utilized to make some progress toward answering Prescott's (1998) call for a theory of TFP. The model is used to simulate artificial data and connect theoretical assumptions of returns to scale and resource costs to the conditions under which TFP miss‐measures the actual growth of technological knowledge.     

Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence

Abstract.  Many empirical studies based on plant-level data have found that firms that enter the export markets are more productive than non-exporters and that this difference in productivity is achieved before firms become involved in exporting. These findings have challenged the traditional view that openness to trade increases productivity and economic growth. This article reconsiders the literature on trade, growth, and trade policies and argues that a careful examination of these new findings is consistent with the idea that exporting increases productivity and economic growth.     

中国数字经济规模测度与生产率分析

研究目标:考察中国数字经济的规模与结构特征,分析数字要素对中国经济生产率的影响及其变化趋势。研究方法:基于投入产出序列表数据,结合数字经济内涵、信息经济理论及增长核算方法,建立数字经济规模和全要素生产率测算框架进行分析。研究发现:近年来,中国数字经济规模年均实际增长率高达11.24%,已经成为支撑经济增长的重要推动力量;中国数字经济结构不断变化,数字融合部门增速高于数字替代部门,但二者均低于数字基础部门的增速;中国经济增速逐步放缓,而全要素生产率总体上行,数字资本在经济增长中的份额呈上升趋势。研究创新:提出包含三大效应的数字经济测度理论,将数字经济划分为基础部门、融合部门和替代部门,建立数字经济核算的方法框架,关注并考察了数字要素的增长效应。研究价值:有助于完善数字经济测度理论,为推动中国经济高质量发展提供依据。     

Productivity and Efficiency Measurement in Our “New Economy”: Determinants,Interactions, and Policy Relevance

Interpreting and using productivity and efficiency measures requires establishing the determinants and implications of observed performance. This is not a simple task, however, given the complex interactions among economic entities in modern markets. Identifying and quantifying performance drivers often involves parametric estimation of models with explicit performance factors build into functions representing technology and behavior. Here I overview some such studies in the literature on food system economic performance, to emphasize the potential to empirically represent a more complex web of technological and market phenomena than in standard productivity analyses, to enhance the measures' interpretability and relevance for policy guidance.     

Spatial determinants of productivity: Analysis for the regions of Great Britain

This paper uses NUTS3 sub-regional data for Great Britain to analyse the determinants of spatial variations in income and productivity. We decompose the spatial variation of earnings into a productivity effect and an occupational composition effect. For the former (but not the latter) we find a robust relationship with proximity to economic mass, suggesting that doubling the population of working age proximate to an area is associated with a 3.5% increase in productivity in the area. We measure proximity by travel time, and show that effects decline steeply with time, ceasing to be important beyond approximately 80 min.     

Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries

This paper is a survey of recent contributions to, and developments of, the relationship between outsourcing, efficiency and productivity growth in manufacturing and services. The objective is to provide a thorough and up–to–date survey that provides a significant discussion on data, as well as on the core methods of measuring efficiency and productivity. First, the readers are introduced to the measurement of partial and total factor productivity growth. Different parametric and non–parametric approaches to the productivity measurement in the context of static, dynamic and firm–specific modelling are discussed. Second, we survey the econometric approach to efficiency analysis. The issues of modelling, distributional assumptions and estimation methods are discussed assuming that cross–sectional or panel data are available. Third, the relationship between outsourcing and productivity growth in manufacturing and services is discussed. The correspondence between a number of hypotheses and empirical findings are examined. Examples of varieties of relevant empirical applications, their findings and implications are presented. Fourth, measurement of inputs and outputs in manufacturing and services are discussed. Finally, to promote useful research, a number of factors important to the analysis of outsourcing, efficiency and productivity growth in the service sector are summarised.     

PRODUCTIVITY IN PUBLIC SERVICES

Abstract.  This paper discusses issues arising in the measurement of productivity in public services. Compared to measuring productivity in the private sector difficulties arise because the output of public services is often unpriced and because some public services are consumed collectively. A key problem is measuring the full range of outputs and quality improvements delivered by public sector organizations that are valued by society. Without comprehensive measures of output, productivity statistics may be misleading. I outline methods used in the measurement of both private and public sector productivity and discuss the measurement of public sector productivity in practice. Finally I discuss studies that examine factors underlying productivity differences and productivity growth in public and private sector organizations. Public sector reforms and the use of pilot schemes in public sector organizations present opportunities for research to identify causal effects on productivity.     

Productivity and efficiency in the US: effects of business cycles and public capital

We add to the literature on the US productivity slowdown and effects of public capital on productivity by employing Malmquist productivity indexes to measure productivity. These indexes allow us to decompose productivity growth into efficiency change and technological innovation. We derive these components for each observation, which we exploit to explore factors which may lead to differences in productivity across regions, including business cycles, both own-state and cross-border public infrastructure investment, and relative sizes of the manufacturing, service and public sector. Our results suggest that the components of total factor productivity change lend important insights into the fairly complex effects of public capital on productivity growth.     

Trade, migration and regional unemployment

A by now large literature in regional economics has greatly improved our understanding of the determinants of the observed spatial disparities in productivity. However, this literature neglects what seems to be a robust and persistent fact accompanying regional productivity differences: high productivity regions also have lower unemployment than low productivity regions. In this paper, we set out a model in the New Economic Geography (NEG)/job search tradition to explore the theoretical determinants of this fact. We find that the same forces producing regional agglomeration and productivity differences also generate persistent unemployment disparities. Moreover, we highlight a contrast between the short-run and long-run effects of migration on regional unemployment. In particular, migration from the periphery to the core may reduce unemployment disparities in the short-run, but exacerbates them in the long-run.