The Effects of Export, Technical change and Markup on Total Factor Productivity Growth: Evidence from Singapore's Electronics Industry

This paper illustrates a new technique to measure the effect of export demand on the conventional TFP growth index at the industry level. We apply the technique to Singapore’s electronics industry and find that rapid growth in exports accounts for most of the TFP growth in this industry.TFP growth, exports, Singapore's electronics industry

Labour Productivity, Import Competition and Market Structure in Australian Manufacturing

Through altering competitive conditions, globalisation can have a significant impact on productivity of the domestic economy. Foreign competition can stimulate the productivity improvements by domestic firms or it can lead to the elimination of inefficient producers. Alternatively, the threat or reality of foreign competition can impede investment in new equipment and techniques, thereby slowing the adaptation of productivity improvements. Thus, the impact of globalisation on productivity growth needs to be explored empirically. In this paper, we estimate the impact of import competition on labour productivity growth in Australian manufacturing using a panel data analysis for a three-decade period. The estimates extend and complement earlier work by Bloch and McDonald (2001), which applies panel data analysis to a sample of Australian manufacturing firms for a one-decade period. The use of industry level data in place of firm-level data, allows us to include the effects of entry or exit of firms, while the longer time period allows determine whether the impact of import competition on productivity growth changes to following micro-economic reform in the Australian economy. As with Bloch and McDonald, we also examine whether the impact of import competition varies across industries with domestic market structure. Reference: Bloch, H and J T McDonald (2001), Import Competition and Labour Productivity, Journal of Industry, Competition and Trade, 1(3), 301-319.productivity growth, Australian manufacturing

Australian telephone network subscription and calling demands: evidence from a stated-preference experiment

This paper examines the impact of the subscription-calling rate structure on the demand for residential telephone network subscription and calling. Stated-preference experimental data are used to estimate demand equations. The results indicate that household network subscription and calling demands for the Sydney Metropolitan Area are affected by both rate structure and household socio-demographic variables.Telecommunications demand; Subscription-calling rate structure; Stated-preference experimental analysis; Survey

Economies of scale and scope in Australian telecommunications

This paper employs a composite cost function to examine the cost structure of Australian telephone services. The composite cost model combines the log-quadratic input price structure of the translog model with a quadratic structure for multiple outputs. Quadratic output structures permit the measurement of economies of scale, economies of scope, and subadditivity without prejudging their presence. Model estimates, on Telstra system data from 1926 to 1991, show that the production of Australian telephone services exhibits economies of scope but no ray economies of scale.Telecommunications; production; scale; scope; Australia

The cost structure of Australian telecommunications

Since 1991 Australian telecommunications has undergone substantial reform. To a large extent, the economic correctness of pro-competitive policy depends on the non-existence of natural monopoly technology. This paper provides estimates of the Australian telecommunications system cost structure, and tests for subadditivity from 1943 to 1991. Additivity of the cost function after 1945 rejects the natural monopoly hypothesis and supports recent government policy. Diminished natural monopoly characteristics suggest that co-ordination between firms through networking can achieve similar economies as internal co-ordination within a monopoly. This finding is important, given the trend towards network unbundling, and service provision through interconnection.Cost structure of Australian telecommunications

Labour and capital saving technical change in telecommunications

The Australian telecommunications sector is being improved and extended through substantial recent investment in intelligent technology such as digital switching, fibre optics, satellite and cellular transmission, and the Internet. These technologies are being progressively integrated with technology from the broadcasting, computer and electronics industries, providing a unified information infrastructure for information transmission and processing. Technological progress embodied in new equipment has the effect of increasing the efficiency of the factors of production. Such efficiency increases can be biased towards a particular factor. For instance, the impact of labour-augmenting technical change is a decline in the cost of labour per unit of production. When such biases are apparent the relativity between the costs of labour and capital per unit of production is changed. In the longer term, technical change can impact on the rate of employment growth and also on the rate of capital accumulation. In this study the Australian telecommunications cost structure is examined for the period 1919 to 1988. To measure labour saving and capital saving technical change a translog cost model is estimated. Multiproduct telecommunications cost studies typically employ the translog cost model (Evans and Heckman, 1984; Roller, 1990a; 1990b; Shin and Ying, 1992; McKenzie and Small, 1997). The translog model places no a priori restrictions on substitution possibilities among the factors of production, and allows scale economies to vary with the level of output.

Productivity growth in Australian manufacturing: a vintage capital model

Recent contributions by Hulten (1992) and Gort et al. (1993) indicate a renewed interest in using capital-embodied technology models to understand the sources of productivity growth. An advantage of models with capital-embodied technology is that current productivity is related to the prior time path of investment. This provides a potential dynamic link between past market conditions and current productivity performance. In particular, models with capital-embodied technology provide a possible explanation for the positive relationship between productivity growth and the rate of investment, particularly investment in capital equipment, found in cross-country studies (see, for example, Wolff (1991) and De Long and Summers (1992)). Regressions in the form of the relationships derived from the analysis are estimated using data for a cross-section of Australian manufacturing industries. Variables suggested by the analysis of the vintage capital model contribute significantly to the explanation of differences in average labour productivity growth across the sample industries. However, specific restrictions on coefficient values derived from the analysis are rejected by the regression results. The implications of this mixed support for the application of the vintage capital model to explaining labour productivity growth in Australian manufacturing are discussedAustralian manufacturing; productivity growth

Penrose and Steindl: Foundations for a general theory of firms and competition

Edith Penrose and Josef Steindl each developed a distinctive analysis of the growth of firms. They undertook to understand the process that was leading to increasing dominance of industry, particularly manufacturing industry, by a small number of large firms. In the present paper, we examine the work of these two authors to detect similarities and differences in the way they deal with the determinants of firm growth and the implications of such growth for the competitive struggle amongst firms.Our particular focus is on the divergent conceptualisations of the notion of capacity between Penrose and Steindl, referring to the quantity and quality of productive services from management with experience within the firm in the case of Penrose and to the quantity and quality of physical assets (particularly machinery) in the case of Steindl. We examine the internal logic of each conceptualisation, as well comparing motivations and implications. Our appraisal is that they both provide coherent, but partial, explanations of the forces driving firm growth. We trace the difference in their explanations to different empirical bases motivating each author?s analytical schema. This leads us to suggest an encompassing explanation that focuses on overcoming any of a variety of bottlenecks, including managerial capability, productive capacity and market development, which can impede a firm?s ability to grow

The language of pluralism from the history of the theory of price determination: Natural price, equilibrium price and administered price

This paper seeks to identify terminology to aid in distinguishing the approaches to the theory of price determination as presented in classical political economy, neoclassical economics and post-Keynesian economics. Through a review of the respective literature, a dominant usage is identified for the theoretical price concept in each theory. Natural price is identified with classical theory, equilibrium price with neoclassical theory and administered price with post-Keynesian theory. Use of the differentiated terminology is advocated for improving clarity in pluralist discourse on the theory of price determination and the role of prices in modern market economies with their inherent complexity

Prices in Motion: Schumpeter’s Contribution to Price Theory

Schumpeter distinguishes between the circular flow of economic activity and economic development. The former is characterised by equilibrium, while the latter involves discontinuous change that induces business cycles. Schumpeter argues that with development prices are generally in motion. Schumpeter’s theory of the business cycle has been heavily criticised. Specific criticisms relating to his price theory include its characterisation of prices stabilising near the Walrasian competitive equilibrium for a stationary economy and its prediction of a downward trend in prices over the longest cycles. This paper reviews Schumpeter’s theory and the critiques before suggesting a way forward to a revised theory of prices in motion