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Effective Rates of Sectoral Productivity Change

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  • Pirkko Aulin-Ahmavaara

Abstract

In effective rates of sectoral productivity change, some of the inputs are treated as produced. Here, this is extended to cover all the inputs. All the sectoral rates of productivity growth based on a static input-output (IO) framework are shown to be equal to the corresponding rates of decrease in the production price. For the direct rate, all the input prices are treated as exogenous constants. For the effective rates, prices of the inputs, which are treated as produced, are determined by production technology. The fully effective rate is derived from the price equations of the closed dynamic IO model. It is equal to the rate of decrease in the production price when the prices of all inputs, human capital and human time included, depend on production technology. The overall rate, obtained as a weighted sum of the fully effective sectoral rates, is equal to the rate of growth in the growth potential of the economy.

Suggested Citation

  • Pirkko Aulin-Ahmavaara, 1999. "Effective Rates of Sectoral Productivity Change," Economic Systems Research, Taylor & Francis Journals, vol. 11(4), pages 349-363.
    • Handle: RePEc:taf:ecsysr:v:11:y:1999:i:4:p:349-363
    DOI: 10.1080/09535319900000026
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    Cited by:

    1. Cheng,Wenyin & Meng,Bo & Gao,Yuning, 2023. "‘Made in the World’: Measuring the Productivity of Global Value Chains," IDE Discussion Papers 890, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Oscar De Juan & Eladio Febrero, 2000. "Measuring Productivity from Vertically Integrated Sectors," Economic Systems Research, Taylor & Francis Journals, vol. 12(1), pages 65-82.
    3. Chuan Liu & Marianne Saam, 2022. "ICT and Productivity Growth Within Value Chains," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(3), pages 711-737, September.
    4. Shimpo, Kazushige, 2005. "Interindustry effects of productivity growth in Japan: 1960-2000," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 568-585, December.
    5. Victoria Shestalova, 2001. "General Equilibrium Analysis of International TFP Growth Rates," Economic Systems Research, Taylor & Francis Journals, vol. 13(4), pages 391-404.
    6. Correa, Lisa, 2006. "The economic impact of telecommunications diffusion on UK productivity growth," Information Economics and Policy, Elsevier, vol. 18(4), pages 385-404, November.
    7. Ten Raa, T. & Shestalova, V., 2006. "Alternative Measures of Total Factor Productivity Growth," Discussion Paper 2006-54, Tilburg University, Center for Economic Research.
    8. Theo Santini & Ricardo Azevedo Araujo, 2021. "Productivity growth and sectoral interactions under Domar aggregation: a study for the Brazilian economy from 2000 to 2014," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-30, December.
    9. Tulika Bhattacharya & Meenakshi Rajeev & Indrajit Bairagya, 2018. "Are high-linked sectors more productive in India? An analysis under an input–output framework," Indian Economic Review, Springer, vol. 53(1), pages 333-367, December.

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