1 Introduction
A recent comparison of market sector multifactor productivity in Australia and New Zealand showed similar rates of growth in both countries over the period 1988 to 2002. But the rate of physical capital accumulation has been lower in New Zealand since 1993 and has led to a lower capital-labour ratio (see Black, Guy and McLennan, 2003). One possible explanation for the lower capital-labour ratio in New Zealand may be a different industrial structure.
The purpose of this paper is to examine how New Zealand’s production structure compares to that in other OECD countries. The methodology used is input output analysis. Input output tables contain detailed information about the process of production, the use of goods and services (products) and the income generated in that production (United Nations, 1993). They can be used to assess the composition of industries’ gross output and value added, the degree of specialisation of industries and the contribution of primary inputs in the production of the economy.
The main findings of this paper can be summarised as follows. New Zealand’s industrial structure is broadly similar to that in other OECD countries although some differences arise as certain industries are more important in some countries. New Zealand’s exports appear to be more diversified and have a large value added content. Moreover, the return to capital, as measured by the share of gross operating surplus in value added, is high.
The remainder of the paper proceeds as follows. Section 2 provides a brief description of input output tables and data available. The composition of total supply and value added is discussed in section 3, while section 4 investigates inter industry linkages. Six measures of inter industry linkages are used: (i) backward and forward linkages, (ii) indices of industry interconnectedness, (iii) a value added index, (iv) a value added production multiplier, (v) a cumulated primary input coefficient for compensation of employees and (vi) a measure of import content of final demand output. Section 5 summarises and concludes.
