Productivity in New Zealand 1988 to 2002

New Zealand Treasury Working Paper 03/06

Published June 2003

Authors: Melleny Black, Melody Guy and Nathan McLellan

Abstract

This paper reports new aggregate and industry productivity series for the New Zealand economy for the period 1988 to 2002. These productivity series are intended for ongoing monitoring of New Zealand’s productivity performance and for use in further analyses investigating the evolution, sources and determinants of New Zealand’s productivity growth. Productivity series are constructed using index number techniques and industry data sourced from Statistics New Zealand. Throughout, comparisons are made with the productivity estimates reported in Diewert and Lawrence’s (1999), Measuring New Zealand’s Productivity. Industry data are also used to construct productivity series that are comparable with the market sector productivity series published by the Australian Bureau of Statistics. The comparison between Australia and New Zealand shows that market sector multifactor productivity has been similar in both countries over the full sample period. Since 1994 average labour productivity growth has been higher in Australia, which reflects the relatively lower rate of physical capital accumulation in New Zealand after 1993. On the other hand, New Zealand’s capital productivity growth has been higher than Australia’s capital productivity growth since 1994, reflecting the relatively higher growth in hours worked in New Zealand.

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Abstract Table of Contents List of Tables List of Figures 1 Introduction 2 Index number methodology 3 Data 4 New Zealand’s productivity performance 4.1 Aggregate productivity 4.2 Industry productivity 5 Australia and New Zealand productivity 6 Conclusions References Appendix 1 – Industry productivity database Appendix 2 – Market sector New Zealand productivity series	twp03-06.pdf (262 KB) pp. 1–37
List of Tables Table 1 – Trend annual productivity growth Table 2 – Alternative index formulae multifactor productivity series: average growth rates Table 3 – Diewert and Lawrence average productivity growth Table 4 – Average multifactor productivity growth by industry Table 5 – Australia and New Zealand productivity comparison Appendix Table 1 – Aggregation of industry data Appendix Table 2 – Key differences between the HLFS and the QES Appendix Table 3 – Market sector multifactor and partial productivity estimates Appendix Table 4 – Multifactor productivity series: alternative index formulae Appendix Table 5 – Industry multifactor productivity series: Primary, mining and quarrying, construction, and manufacturing industries Appendix Table 6 – Industry multifactor productivity series: Electricity, gas and water, transport and communications, business and property services, personal and community services, and retail and wholesale trade industries Appendix Table 7 – Australia and New Zealand productivity series List of Figures Figure 1 – Multifactor and partial productivity estimates Figure 2 – Annual output and productivity growth Figure 3 – Comparison of multifactor productivity using alternative index formulae Figure 4 – Comparison with Diewert and Lawrence market sector productivity series Figure 5 – Multifactor productivity: Primary, Mining and quarrying, Construction and Manufacturing Industries Figure 6 – Multifactor productivity: Electricity, gas and water, Retail and wholesale trade, Personal and community services and Business and property Industries Figure 7 – Multifactor productivity: Transport, storage and communications industry Figure 8 – Australia and New Zealand output, labour and capital comparison Figure 9 – Australia and New Zealand productivity comparison Figure 10 – Australia and New Zealand capital-labour ratios Figure 11 – New Zealand capital-labour ratio and the relative price of labour to capital

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Abstract

List of Tables

List of Figures

1 Introduction

2 Index number methodology

3 Data

4 New Zealand’s productivity performance

5 Australia and New Zealand productivity

6 Conclusions

References

Appendix 1 – Industry productivity database

Appendix 2 – Market sector New Zealand productivity series

twp03-06.pdf (262 KB) pp. 1–37

List of Tables

List of Figures

Acknowledgements

We would like to thank Bob Buckle, Kevin Fox, John Janssen, Denis Lawrence, Peter Mawson and Grant Scobie for helpful discussion and suggestions in the initial stages of this research project. We would also like to thank Ken Fletcher, John Morris and Nick Treadgold from Statistics New Zealand for invaluable discussions and the provision of data. We are grateful to Nargis Bharucha, Mark Blackmore, Bob Buckle, Ken Carlaw, Iris Claus, John Creedy, Paul Dalziel, John Janssen, Struan Little, Peter Mawson, Grant Scobie, Kam Szeto and Bruce White for helpful comments on an earlier draft of this paper. Comments from participants at seminars held at Statistics New Zealand, the New Zealand Treasury and the Reserve Bank of New Zealand are greatly acknowledged.

Disclaimer

The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the New Zealand Treasury. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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Productivity in New Zealand 1988 to 2002

Abstract

Contents

Abstract

Table of Contents

List of Tables

List of Figures

1 Introduction

2 Index number methodology

3 Data

4 New Zealand’s productivity performance

5 Australia and New Zealand productivity

6 Conclusions

References

Appendix 1 – Industry productivity database

Appendix 2 – Market sector New Zealand productivity series

List of Tables

List of Figures

Acknowledgements

Disclaimer