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Productivity growth in Australian manufacturing sector: some new evidence

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  • R. Mahadevan

Abstract

This article examines the productivity performance of Australia's manufacturing sector by decomposing its output growth into input growth, technological progress and gains in technical efficiency. This three-way decomposition is done with an improved version of the stochastic frontier model using eight, two-digit industry level data from 1968/9 to 1994/5. Empirical evidence shows that input growth fueled output growth from 1968/9 to 1973/4, but since then, total factor productivity (TFP) growth has been the main contributor of output growth. While the trend of TFP growth was found to be promising for most industries with positive and increasing technological progress, the negative gains from technical efficiency over time is however cause for concern.

Suggested Citation

  • R. Mahadevan, 2002. "Productivity growth in Australian manufacturing sector: some new evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 1017-1023.
    • Handle: RePEc:taf:apeclt:v:9:y:2002:i:15:p:1017-1023
    DOI: 10.1080/13504850210165829
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    References listed on IDEAS

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    1. Satish Chand, 1999. "Trade Liberalization and Productivity Growth: Time‐Series Evidence from Australian Manufacturing," The Economic Record, The Economic Society of Australia, vol. 75(1), pages 28-36, March.
    2. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    3. Satish Chand & Kunal Sen, 2002. "Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 6(1), pages 120-132, February.
    4. repec:bla:ecorec:v:75:y:1999:i:228:p:28-36 is not listed on IDEAS
    5. Narasimham, Gorti V L & Swamy, P A V B & Reed, R C, 1988. "Productivity Analysis of U.S. Manufacturing Using a Stochastic-Coefficients Production Function," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 339-349, July.
    6. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Dean Parham, 2004. "Sources of Australia's Productivity Revival," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 239-257, June.
    2. Harry Bloch, 2010. "Technological Change in Australian Manufacturing," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(1), pages 28-38, March.

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