Cao, Kay

Forbes, Rod

AgEcon Search - Research in Agricultural & Applied Economics

  Give to AgEcon Search    The World’s Largest Open Access Agricultural & Applied Economics Digital Library    This document is discoverable and free to researchers across the globe due to the work of AgEcon Search.    Help ensure our sustainability.         AgEcon Search http://ageconsearch.umn.edu aesearch@umn.edu          Papers downloaded from AgEcon Search may be used for non-commercial purposes and personal study only. No other use, including posting to another Internet site, is permitted without permission from the copyright owner (not AgEcon Search), or as allowed under the provisions of Fair Use, U.S. Copyright Act, Title 17 U.S.C. 1MEASURING SECTOR PRODUCTIVITYKay Cao & Rod ForbesMonitoring & Evaluation, MAF PolicyPaper presented at the 2007 NZARES Workshop, Wellington, New Zealand. August 23, 2007.Copyright by author(s). Readers may make copies of this document for non-commercial purposes only, provided that this copyright notice appears on all such copies.K C & R d F bMEASURING SECTOR PRODUCTIVITYay ao  o  or esMonitoring & Evaluation, MAF PolicyNZARES Workshop, 23rd August 20072Purpose & Outline• Purposes:– What MAF’s doing and future research;– Discussion of an alternative method.• Outline:o Backgroundo Current resultso Current method and datao Alternative method (Labour share)o Results comparisono Conclusion & Future researchBackground- MAF’s Growth and Productivity projectProductivity measurement Trade performance-  ,  , and others- Started 06/07, now second year- Productivity measurement works with Statistics NZ and Massey University;- Currently using 2 methods: Index number (Statistics NZ data) and Malmquist (Massey’s project using MAF’s Farm Monitoring data)3Some Definitions- Total Factor Productivity, not partial productivity;TFP measures production efficiency;-    - Changes as a result of changes in management practices and technology;- Important source for long term growth;- BUT not a measure for profitability;- TFP contributes to profitability BUT doesn’t incl. price effects;- MAF’s TFP measures at aggregated industry level;Current TFP resultsAgriculture, forestry, and downstream sectors TFP growth (annual average growth rate % 1972-2006)  Time Period   Agriculture Food, Beverage & Tobacco Manufacturing Forestry & Logging Wood & Papers Manufacturing SNZ Measured Sector 1972-2006 2.0%  2.6%   1972-1984 -0.5%  1.3%   1984 2006 3 4%  3 4%       , - . .      1988-2006 2.2% 1.0% 2.1% 0% 1.5% 1988-1993 -1.3% 1.8% 5.0% -0.5% 1.1% 1993-2006 3.6% 0.7% 0.9% 0.2% 1.7%  4Current data and method• DataI d t t d t f St ti ti NZ• n us ry aggrega e a a rom a s cs  (GDP, productive capital stock, labour FTEs)• Method• Tornquist chained index• Input index aggregated from K and L index weighted by their shares of total factor income• K share derived by user cost of capital method; L is residual;Method cont.• User cost of capital UCC = PKScurrentprices * (d + r)Where d is capital depreciation rate r is rate of ret rn on capital     ,     u   . • K share = UCC/GDPcurrentprices• L share = 1- K share• Total factor input indexwhere wk is K share and wl is L share5Alternative method• Data now available for deriving Labour share• Advantage: – use available National Account data (incl COE, GOS, Tax, Subsidy); and proportion of self-employed;– don’t have to approximate capital ror and other data required for K share method• L share = (employee’s wage + self-employed’s wage + production tax attributed to L)/GDP• K share = 1- L shareResults of L share methodAgriculture, forestry, and downstream sectors TFP growth (annual average growth rate %, 1988-2006) Time Period  Agriculture Food, Beverage & Tobacco Manufacturing Forestry & Logging Wood & Papers Manufacturing SNZ Measured Sector  Capital share method Labour share method Capital share method Labour share method Capital share method Labour share method Capital share method Labour share method  1988-2006 2.2% 2.0% 1.0% 0.7% 2.1% 1.7% 0% 0% 1.5%  6Results cont.TFP Agriculture: method comparison1 30.80.911.11.2.TFP Index 1996=1 Ag K shareAg  L share0.60.71988198919901991199219931994199519961997199819992000200120022003200420052006Results cont.TFP Forestry: method comparison1.50 80.911.11.21.31.4TFP Index 1996=10.60.7.1988198919901991199219931994199519961997199819992000200120022003200420052006Forestry K share Forestry L share7Results cont.TFP FB&T: method comparison1.20.80.911.1TFP Index 1996=1FB&T Manuf. K shareFB&T Manuf L share0.60.71988198919901991199219931994199519961997199819992000200120022003200420052006 .  Results cont.TFP W&P: method comparison1.150.9511.051.1TFP Index 1996=1W&P Manuf. K share0.850.91988198919901991199219931994199519961997199819992000200120022003200420052006W&P Manuf. L share8Results cont.Contribution of TFP, capital, and labour to sector GDP growth (annual average growth rate %, 1988-2006)Time Period   Agriculture Food, Beverage &Tobacco Manuf. Forestry & Logging Wood & Papers Manuf. SNZ Measured Sectors    Capital share method Labour share method Capital share method Labour share method Capital share method Labour share method Capital share method Labour share method  1988-2006 Output growth 1.5% 1.5% 2.0% 2.0% 4.0% 4.0% 1.8% 1.8% 2.7% K  contribution  0% 0.2% 0.9% 1.4% 0.5% 2.3% 1.6% 1.6% 1.1%  L contribution -0.7% -0.7% 0.1% 0% 1.3% -0.1% 0.2% 0.2% 0.1%  TFP contribution 2.2% 2.0% 1.0% 0.7% 2.1% 1.7% 0% 0% 1.5%  Conclusion & Future Research• L share method shows;– Slightly lower TFP estimates   – Higher K contribution;– Lower L contribution;• Advantage of L share method: reflects better factor share as don’t have to approx data;• K share method underestimate K share as missing tax component and approx ror;     • New method only change TFP slightly due to changes in the weighting components NOT the real factor growth9Future Research• Qualitative analysis of factors contributing to sector TFP growth;•Modelling determining factors of TFP growth (Op research contract with Massey Uni);•TFP measurement for sub-sector level using SNZ aggregate data;•TFP measurement for sub-sector level using Farm-level data and possibly SNZ Longitudinal Firm Performance Data (LFPD / IBULDD)Comments / QuestionsToKay.Cao@maf.govt.nzOrRod.Forbes@maf.govt.nz

Measuring Sector Productivity (Power Point)

Abstract

Similar works

Full text

Available Versions

AgEcon Search - Research in Agricultural & Applied Economics

AgEcon Search: Research in Agricultural and Applied Economics